Is SMART Global Holdings, Inc. overvalued or undervalued?

As of 15 October 2024, SMART Global Holdings, Inc. has moved from a fair to a risky valuation grade. The company is currently considered overvalued based on its financial metrics. The P/E ratio stands at 37, significantly higher than the industry average, while the EV to EBITDA ratio is 8.11, which also indicates a premium compared to peers. Notably, the return on equity (ROE) is low at 4.63%, raising concerns about profitability relative to shareholder equity.
In comparison to peers, Semtech Corp. has a much higher P/E ratio of 89.37, while MaxLinear, Inc. shows a negative P/E, indicating varying levels of risk across the sector. The current price of $19.59 is below its 52-week high of $29.81, reflecting a decline of 13.43% over the past year, which contrasts with the S&P 500's positive return of 10.26% in the same period. Overall, these factors suggest that SMART Global Holdings, Inc. is overvalued in the current market environment.