Is Varex Imaging Corp. overvalued or undervalued?

As of 19 November 2024, Varex Imaging Corp. has moved from a fair to a risky valuation grade. The company appears to be overvalued, particularly given its key ratios: a Price to Book Value of 0.64, an EV to EBITDA of 8.64, and an EV to Sales of 0.84. In comparison to its peers, Varex Imaging Corp. has a P/E ratio of -12.47, while Avanos Medical, Inc. has a P/E of 9.80, indicating a stark difference in valuation metrics.
The company's financial performance is concerning, with a negative ROE of -7.66% and a modest ROCE of 5.96%. This suggests that Varex is struggling to generate returns on equity, which could further justify its risky valuation status. Although specific return data is not available, the lack of positive returns relative to the S&P 500 reinforces the notion that the stock may not be a favorable investment at this time.