Is Select Medical Holdings Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Select Medical Holdings Corp. has moved from attractive to very expensive, indicating a shift towards overvaluation. The company appears overvalued, particularly with a P/E ratio of 8, which is below the peer average of 9.21 for Universal Health Services, Inc. and significantly lower than Chemed Corp.'s P/E of 56.91. Additionally, the EV to EBITDA ratio stands at 6.47, which is more favorable compared to Surgery Partners, Inc. at 8.44, but still suggests a premium valuation relative to its peers.
Despite a dividend yield of 2.40% and a solid ROE of 15.17%, the company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -28.97% compared to the index's 13.30%. This underperformance, combined with the high valuation ratios, reinforces the conclusion that Select Medical Holdings Corp. is currently overvalued.