Is The ONE Group Hospitality, Inc. overvalued or undervalued?

As of 7 May 2024, the valuation grade for The ONE Group Hospitality, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued, as evidenced by its P/E ratio of 7, which is significantly lower than the peer average P/E of approximately 12.62, and an EV to EBITDA ratio of 4.58, compared to peers like BJ's Restaurants, Inc. at 6.81 and Carrols Restaurant Group, Inc. at 6.91. Additionally, the PEG ratio of 0.01 suggests that the stock is not only undervalued relative to its earnings growth but also raises concerns about its future growth prospects.
In terms of peer comparison, The ONE Group's P/E ratio of 7 is notably lower than that of BJ's Restaurants, Inc. at 26.98 and Potbelly Corp. at 40.09, both of which are classified as very expensive. Furthermore, the company's recent stock performance has been disappointing, with a year-to-date return of -10.00% compared to the S&P 500's 12.22%, and an even steeper decline of -26.69% over the past year against the benchmark's 17.14%. This underperformance reinforces the notion that The ONE Group Hospitality, Inc. is currently overvalued in the market.