Is Silicom Ltd. overvalued or undervalued?

As of 1 February 2024, Silicom Ltd. has moved from a fair to a risky valuation grade, indicating a significant deterioration in its financial outlook. The company is currently assessed as overvalued, particularly given its negative P/E ratio and troubling financial metrics. Key ratios include a Price to Book Value of 0.75, an EV to EBIT of -1.80, and a ROCE of -24.01%, all of which highlight the company's struggles to generate positive returns.
In comparison to its peers, Silicom Ltd. stands out negatively, with Radware Ltd. exhibiting a fair valuation and a P/E of 128.27, while Allot Ltd. is also classified as risky with a P/E of -94.71. The stark contrast in valuation and performance metrics underscores Silicom's challenges in the current market environment. Additionally, while Silicom has seen a recent 5.85% return over the past week, it still lags behind broader market indices like the S&P 500, which returned 0.13% in the same period.