Is Shoals Technologies Group, Inc. overvalued or undervalued?

As of 6 May 2025, the valuation grade for Shoals Technologies Group, Inc. has moved from fair to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued based on its financial metrics. Key ratios include a P/E ratio of 45, an EV to EBITDA of 17.05, and a Price to Book Value of 1.54, which are significantly higher than many peers in the industry.
In comparison, Cirrus Logic, Inc. is valued attractively with a P/E ratio of 15.99 and an EV to EBITDA of 10.25, while Diodes, Inc. also shows an attractive valuation with a P/E of 55.43 and an EV to EBITDA of 13.63. The stark contrast in these ratios suggests that Shoals Technologies is trading at a premium compared to its peers. Additionally, the company's stock has underperformed against the S&P 500 over various time frames, including a 1-year return of -23.96% compared to the S&P 500's 10.26%, reinforcing the view that it is overvalued in the current market context.