Is Simulations Plus, Inc. overvalued or undervalued?

As of 8 July 2024, the valuation grade for Simulations Plus, Inc. has moved from expensive to very expensive, indicating a significant deterioration in its valuation outlook. The company is currently deemed overvalued. Key ratios highlight this concern, with a P/E ratio of 107, an EV to EBIT of 134.36, and an EV to Sales ratio of 6.78, all of which are substantially higher than industry norms.
In comparison to peers, Simulations Plus, Inc. stands out unfavorably; for instance, Magnite, Inc. has a P/E ratio of 78.19 and an EV to EBITDA of 22.15, which are considerably lower than those of Simulations Plus. The company's recent stock performance has also been troubling, with a year-to-date decline of 38.80%, starkly contrasting with the S&P 500's modest gain of 2.44% over the same period. This further reinforces the perception of overvaluation amidst a challenging market environment.