Is SPS Commerce, Inc. overvalued or undervalued?

As of 14 May 2025, the valuation grade for SPS Commerce, Inc. has moved from very expensive to expensive, indicating a slight improvement in its perceived value. Despite this change, the company remains overvalued based on its current metrics. The P/E ratio stands at 70, significantly higher than the industry average of approximately 65.65, while the EV to EBITDA ratio is 55.94, again above the peer average of 35.88. Additionally, the PEG ratio of 4.34 suggests that the stock is priced at a premium relative to its growth prospects.
In comparison with peers, Robinhood Markets, Inc. has a lower P/E of 41.60 and a PEG of 0.04, while Toast, Inc. shows a P/E of 145.27, indicating a wide range of valuations within the sector. The company's return performance has also lagged behind the S&P 500, with a year-to-date decline of 25.73% compared to a 2.44% gain for the index. Overall, SPS Commerce, Inc. is currently overvalued in the market.