Is Servotronics, Inc. overvalued or undervalued?

As of 17 March 2025, the valuation grade for Servotronics, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued, particularly given its high Price to Book Value of 5.29 and an EV to EBITDA ratio of 111.50, which suggests that investors are paying a premium relative to earnings before interest, taxes, depreciation, and amortization. Additionally, the ROE is notably negative at -1.25%, further supporting the view that the company's current valuation may not be justified.
In comparison to peers, Servotronics, Inc. has a significantly unfavorable P/E ratio of -119.90, while its EV to EBITDA ratio of 106.84 is also higher than many competitors in the Electronics & Appliances industry. The company's recent stock performance has been impressive, with a year-to-date return of 323.37%, significantly outpacing the S&P 500's return of 12.22% during the same period, which may contribute to the inflated valuation perception.