Is Telephone & Data Systems, Inc. overvalued or undervalued?

As of 4 August 2023, the valuation grade for Telephone & Data Systems, Inc. has moved from very attractive to risky, indicating a shift in perception regarding its investment potential. The company appears overvalued, particularly given its high P/E ratio of 52 compared to peers like Liberty Broadband Corp., which has a P/E of 7.24, and United States Cellular Corp. at 41.99. Additionally, the EV to EBITDA ratio stands at 64.66, significantly higher than the industry average, while the Price to Book Value is relatively low at 0.87.
In terms of performance, Telephone & Data Systems, Inc. has shown strong returns over the long term, with a 1-year return of 64.13% compared to the S&P 500's 17.14%, and a remarkable 3-year return of 144.15% against the S&P 500's 70.41%. However, recent short-term performance has lagged, with a 1-week return of -3.10% versus the S&P 500's 1.05%. Overall, the combination of high valuation ratios and recent performance trends suggests that the stock is overvalued in the current market context.