Is The Pennant Group, Inc. overvalued or undervalued?

As of 8 May 2025, The Pennant Group, Inc. has moved from an expensive to a very expensive valuation grade. The company's current valuation appears to be overvalued, given its P/E ratio of 35, which significantly exceeds the industry average, and an EV to EBITDA ratio of 21.52. Additionally, the PEG ratio stands at 0.70, indicating that the stock may not be justifying its price relative to its growth potential.
In comparison with peers, Addus HomeCare Corp. has a P/E of 22.93 and an EV to EBITDA of 16.20, while Pediatrix Medical Group, Inc. shows a much lower P/E of 7.64 and an EV to EBITDA of 6.91, highlighting the premium that The Pennant Group is trading at. Despite a strong return of 25.31% over the past year compared to the S&P 500's 10.26%, the high valuation metrics suggest that investors may be overestimating future growth prospects.