Is Teradata Corp. overvalued or undervalued?

As of 5 February 2025, Teradata Corp. has moved from a fair to attractive valuation grade, indicating a shift in perception regarding its investment potential. The company is currently considered undervalued, with a P/E ratio of 15, significantly lower than its industry peers, such as Five9, Inc., which has a P/E ratio of 298.80. Additionally, Teradata's EV to EBITDA stands at 7.13, while its PEG ratio is an impressive 0.09, suggesting strong growth prospects relative to its price.
In comparison to its peers, Teradata's financial metrics highlight its attractiveness; for instance, its ROE is a remarkable 91.36%, showcasing efficient use of equity. The company's valuation appears favorable when juxtaposed with the broader market, as it has underperformed against the S&P 500 over various time frames, including a year-to-date decline of 31.46% compared to the S&P 500's gain of 2.44%. This underperformance, combined with strong financial ratios, reinforces the view that Teradata Corp. is currently undervalued.