Is Silicom Ltd. overvalued or undervalued?

As of 1 February 2024, the valuation grade for Silicom Ltd. has moved from expensive to risky, indicating a deterioration in its valuation outlook. Based on the available metrics, the company appears to be overvalued. The Price to Book Value stands at 0.75, while the EV to Sales ratio is 0.40, both suggesting that the market may be pricing the stock too high relative to its underlying assets and sales performance. Additionally, the EV to EBITDA ratio is -1.80, reflecting negative earnings before interest, taxes, depreciation, and amortization, which further supports the overvaluation thesis.
In comparison to its peers, Silicom Ltd. has a P/E ratio of -8.5450, while Allot Ltd. shows an even more negative P/E of -397.7422, and Iteris, Inc. is considered expensive with a P/E of 221.3691. This highlights that Silicom's valuation metrics are not only poor but also worse than some of its peers in the risky category. Over the past year, Silicom Ltd. has returned 37.65%, significantly outperforming the S&P 500's return of 17.14%, but the long-term perspective shows a concerning decline with a 3-year return of -51.80% compared to the S&P 500's 70.41%.