Is The Cato Corp. overvalued or undervalued?

As of 18 May 2023, The Cato Corp. has moved from a very attractive to a risky valuation grade, indicating a significant deterioration in its financial outlook. The company is currently considered overvalued, given its troubling financial ratios and performance metrics. Key ratios include a Price to Book Value of 0.31, an EV to EBIT of -0.67, and a ROCE of -22.78%, all of which reflect the company's struggles in generating profits and managing capital effectively.
In comparison to its peers, The Cato Corp. exhibits a stark contrast in valuation metrics. For instance, Shoe Carnival, Inc. is rated attractive with a P/E ratio of 12.12 and an EV to EBITDA of 6.80, while Stitch Fix, Inc. is also rated risky with an EV to EBITDA of -20.90. The Cato Corp.'s recent stock performance has been dismal, with a year-to-date decline of 27.44%, significantly underperforming the S&P 500, which has returned 2.44% in the same period. This further reinforces the conclusion that the company is overvalued in its current state.