Is SolarEdge Technologies, Inc. overvalued or undervalued?

As of 8 May 2024, the valuation grade for SolarEdge Technologies, Inc. has moved from expensive to risky, indicating a more cautious outlook on the stock. The company appears to be overvalued, given its negative P/E ratio and troubling returns on capital, with a Price to Book Value of 1.81 and an EV to Sales ratio of 1.07. In comparison to peers, SolarEdge's valuation metrics are significantly less favorable; for instance, Lumentum Holdings, Inc. has a P/E ratio of 172.90, while Generac Holdings, Inc. boasts a more reasonable EV to EBITDA of 18.40.
Despite a strong year-to-date return of 155.22% compared to the S&P 500's 12.22%, the long-term performance remains concerning, with a 3-year return of -88.82% versus the S&P 500's 70.41%. This stark contrast reinforces the notion that while the stock has recently performed well, its overall valuation and financial health suggest it is currently overvalued.