Is Twin Disc, Inc. overvalued or undervalued?

As of 21 August 2025, the valuation grade for Twin Disc, Inc. has moved from fair to risky, indicating a more cautious outlook on the company's financial health. Based on the current metrics, Twin Disc appears to be overvalued, particularly when considering its P/E ratio of 25, which is significantly higher than the industry average, and an EV to EBITDA ratio of 6.32, which also suggests a premium valuation. Additionally, the company's return on equity (ROE) stands at a low 3.01%, further highlighting potential concerns regarding profitability.
In comparison to its peers, Twin Disc's P/E ratio is notably high, especially when juxtaposed with Douglas Dynamics, Inc. at 11.82 and The Manitowoc Co., Inc. at 8.08, both of which are classified as attractive. Furthermore, while Twin Disc has shown strong short-term returns, such as a 52.09% increase over the past month compared to the S&P 500's 2.33%, its long-term performance is less favorable, with a 3-year return of only 3.22% against the S&P 500's 70.41%. This disparity reinforces the notion that Twin Disc may be overvalued in the current market context.