Is Select Medical Holdings Corp. overvalued or undervalued?

As of 20 February 2025, the valuation grade for Select Medical Holdings Corp. has moved from fair to very expensive, indicating a significant shift in its valuation outlook. The company appears to be overvalued based on its current metrics, with a P/E ratio of 8, which is notably lower than its peers, such as Surgery Partners, Inc. with a P/E of 34.02 and Premier, Inc. at 14.00. Additionally, Select Medical's EV to EBITDA stands at 6.47, compared to Surgery Partners' 8.35, further highlighting its relative overvaluation.
The company's financial ratios reflect a challenging position, with a Price to Book Value of 1.15 and a ROE of 15.17%. Despite a dividend yield of 2.40%, the overall performance against the S&P 500 shows a decline, with a year-to-date return of -21.01% compared to the index's 2.44%. Given these factors, Select Medical Holdings Corp. is assessed as overvalued in the current market context.