Is SoundThinking, Inc. overvalued or undervalued?

As of 8 August 2023, the valuation grade for SoundThinking, Inc. has moved from fair to risky, indicating a deterioration in its financial outlook. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 2.79 and an EV to EBITDA of 53.43, which are significantly high for a loss-making entity. Additionally, the ROCE and ROE are both negative at -9.35% and -10.20% respectively, further underscoring the company's struggles.
In comparison to peers, SoundThinking's valuation ratios are concerning; for instance, Red Violet, Inc. has a P/E of 82.07, while Priority Technology Holdings, Inc. shows a more reasonable EV to EBITDA of 7.55. The stark contrast in these ratios suggests that SoundThinking is not only underperforming but also priced unfavorably relative to its peers. Furthermore, the company's stock has underperformed against the S&P 500 across multiple periods, with a 3-year return of -55.29% compared to the S&P 500's 70.41%, reinforcing the notion that SoundThinking is currently overvalued.