Is Stem, Inc. overvalued or undervalued?

As of 3 November 2022, the valuation grade for Stem, Inc. moved from fair to risky, indicating a deterioration in its financial outlook. The company appears to be overvalued given its negative valuation metrics, including a Price to Book Value of -0.22 and an EV to EBITDA ratio of -7.66, which suggest significant financial distress. Additionally, the Return on Capital Employed (ROCE) is a concerning -176.30%, further supporting the notion of overvaluation.
In comparison to peers, Stem, Inc. has a significantly lower EV to EBITDA ratio than HollySys Automation Technologies Ltd., which stands at 13.4110, highlighting its relative weakness in generating earnings before interest, taxes, depreciation, and amortization. Other risky peers, such as SES AI Corp. and GrafTech International Ltd., also exhibit negative valuation metrics, reinforcing the challenging position of Stem, Inc. Notably, the company's stock has outperformed the S&P 500 over the past year, returning 91.65% compared to the index's 17.14%, but this may not be sustainable given its underlying financial issues.