Is Sleep Number Corp. overvalued or undervalued?

As of 25 July 2018, the valuation grade for Sleep Number Corp. has moved from fair to risky, indicating a significant deterioration in its financial outlook. The company appears to be overvalued given its negative price-to-book value of -0.47 and a high EV to EBITDA ratio of 9.53, which suggests that investors are paying a premium relative to its earnings potential. Additionally, the EV to Sales ratio of 0.53 further reinforces the notion that the market may be overestimating the company's value.
When compared to peers, Sleep Number Corp. shows a stark contrast with Ethan Allen Interiors, Inc., which has a P/E ratio of 28.41 and an EV to EBITDA of 17.96, indicating a much healthier valuation profile. Similarly, Arhaus, Inc. has a P/E ratio of 22.58 and an EV to EBITDA of 8.19, both of which are significantly better than Sleep Number's metrics. The company's stock has underperformed dramatically, with a one-year return of -54.77% compared to the S&P 500's 17.14%, which highlights the challenges it faces in the current market environment.