Is The Williams Cos., Inc. overvalued or undervalued?

As of 5 August 2024, the valuation grade for The Williams Cos., Inc. has moved from very attractive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, with a P/E ratio of 29, which is substantially higher than its peers such as Enterprise Products Partners LP at 12.27 and Energy Transfer LP at 9.73. Additionally, the EV to EBITDA ratio stands at 31.08, further emphasizing the premium at which the company is trading compared to the industry.
In terms of key financial metrics, The Williams Cos. has a Price to Book Value of 6.09 and a PEG ratio of 4.80, both of which suggest that investors are paying a high price for expected growth. The company's return on equity (ROE) is 21.29%, which is impressive, but when juxtaposed with its high valuation ratios, it raises concerns about sustainability. Notably, while the stock has outperformed the S&P 500 over various time frames, including a 43.79% return over the past year compared to the S&P's 10.26%, the current valuation suggests that the stock may not offer the same upside moving forward.