Is Scotts Miracle-Gro Co. overvalued or undervalued?

As of 3 August 2022, the valuation grade for Scotts Miracle-Gro Co. moved from very expensive to risky. Based on the analysis, the company appears to be overvalued. The P/E ratio stands at 31, significantly higher than the industry average of approximately 27.82. Additionally, the EV to EBITDA ratio is 13.33, which also exceeds the peer average of 12.56, indicating a premium valuation relative to its peers.
In terms of financial performance, the company has a negative Price to Book Value of -16.11, which raises concerns about its asset valuation. The return on capital employed (ROCE) is at 18.04%, but this is overshadowed by the negative return on equity (ROE) due to the negative book value. Compared to peers like Scotts Miracle-Gro Co. itself, which has a P/E of 27.82, the valuation metrics suggest that the stock is trading at a premium. Furthermore, the company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -4.30% compared to the index's 2.44%, reinforcing the notion of overvaluation.