Is Texas Pacific Land Corp. overvalued or undervalued?

As of 7 May 2025, the valuation grade for Texas Pacific Land Corp. has moved from expensive to very expensive. This indicates that the company is overvalued. The P/E ratio stands at 56, significantly higher than its peer Viper Energy, Inc., which has a P/E of 14.95. Additionally, Texas Pacific's EV to EBITDA ratio is 42.86, compared to Viper's 11.59, further highlighting the disparity in valuation.
With a Price to Book Value of 21.22 and an EV to Sales ratio of 34.54, Texas Pacific Land Corp. appears to be trading at a premium relative to its industry peers. The company's high ROCE of 74.50% and ROE of 38.03% suggest strong profitability, but these figures do not justify the current valuation levels. Recent stock performance shows a decline of 17.48% over the past month, contrasting with the S&P 500's gain of 3.83%, reinforcing the notion that the stock may be overvalued in the current market environment.