Is The Lovesac Co. overvalued or undervalued?

As of 17 October 2025, The Lovesac Co. has moved from an attractive to a very expensive valuation grade. The company appears to be overvalued, particularly when considering its P/E ratio of 25, which is lower than peers like Ethan Allen Interiors, Inc. with a P/E of 28.41, and Arhaus, Inc. at 22.58. Additionally, its EV to EBITDA ratio stands at 8.22, which is comparable to Arhaus, but still indicates a premium valuation relative to its performance metrics.
The Lovesac Co. also shows a ROCE of 8.79% and a ROE of 5.34%, which are relatively modest compared to the expectations set by its current valuation. In terms of recent performance, the company has underperformed significantly against the S&P 500, with a year-to-date return of -39.31% compared to the index's 13.30%. This stark contrast reinforces the notion that The Lovesac Co. is overvalued in the current market environment.