Is SMART Global Holdings, Inc. overvalued or undervalued?

As of 15 October 2024, the valuation grade for SMART Global Holdings, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 37, which is significantly higher than the peer average of 37.63 for Tower Semiconductor Ltd., and an EV to EBITDA of 8.11, which is lower than the peer average of 13.38. Additionally, the ROE of 4.63% suggests inefficiency in generating returns compared to its equity base.
In comparison to its peers, SMART Global Holdings, Inc. stands out with a higher P/E ratio than Tower Semiconductor Ltd., while also exhibiting a lower EV to EBITDA ratio. The company's recent stock performance has been strong, with a year-to-date return of 44.14%, significantly outperforming the S&P 500's return of 12.22% over the same period, but this does not necessarily justify its current valuation level. Overall, the combination of high valuation ratios and lower returns on equity suggests that the stock is overvalued in the current market context.