Is The Estée Lauder Companies, Inc. overvalued or undervalued?

As of 4 February 2025, the valuation grade for The Estée Lauder Companies, Inc. has moved from very expensive to risky. The company is currently considered overvalued based on its high P/E ratio of 40, which is above the industry average. Additionally, the EV to EBITDA ratio stands at 22.66, further indicating a premium valuation compared to peers. The PEG ratio of 0.75 suggests that the stock may not be as attractive as it appears when growth is factored in.
In comparison to its peers, The Estée Lauder Companies, Inc. has a P/E ratio of 43.16, which is higher than Procter & Gamble Co. at 39.54 and Colgate-Palmolive Co. at 40.09. While its ROE of 23.55% is impressive, the overall valuation metrics suggest that the stock is not justified at its current price of 78.83, especially considering its significant underperformance over the past year with a return of -30.76% compared to the S&P 500's 10.26%.