Is Sonos, Inc. overvalued or undervalued?

As of 10 May 2023, the valuation grade for Sonos, Inc. has moved from expensive to risky, indicating a shift in perception regarding its financial health. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 3.20, an EV to EBITDA ratio of 33.69, and a negative ROCE of -19.36%. In comparison, Littelfuse, Inc. shows a P/E ratio of 30.08 and an EV to EBITDA of 15.40, while Universal Display Corp. boasts a P/E of 28.20 and an EV to EBITDA of 21.14, highlighting Sonos's relative overvaluation.
Despite a strong one-year stock return of 27.07% compared to the S&P 500's 17.14%, the long-term performance shows a concerning trend, with a 5-year return of only 7.27% against the S&P's 96.61%. This suggests that while Sonos may have had a recent uptick, its overall valuation does not support sustained growth, reinforcing the conclusion that the stock is overvalued.