Is Tilly's, Inc. overvalued or undervalued?

As of 1 June 2023, Tilly's, Inc. has moved from a fair to a risky valuation grade, indicating a significant deterioration in its financial outlook. The company is currently deemed overvalued given its troubling financial ratios, including a Price to Book Value of 0.51 and an EV to Sales ratio of 0.10, both of which suggest that the market is not valuing the company's assets or sales effectively. Additionally, the Return on Capital Employed (ROCE) stands at a staggering -129.03%, reflecting severe operational inefficiencies.
In comparison to its peers, Tilly's, Inc. shows a stark contrast to Shoe Carnival, Inc., which has a P/E ratio of 12.12 and an EV to EBITDA of 6.80, indicating a much healthier financial position. Other risky peers like Stitch Fix, Inc. and Genesco, Inc. also exhibit negative valuations, with P/E ratios of -17.76 and -17.65 respectively. The recent performance of Tilly's stock, which has declined 76.20% over the past year compared to a 10.26% gain in the S&P 500, further underscores its overvalued status in the current market environment.