Is Vestis Corp. overvalued or undervalued?

As of 6 May 2025, the valuation grade for Vestis Corp. has moved from expensive to risky, indicating a deterioration in its investment appeal. The company appears to be overvalued given its current financial metrics, particularly with a Price to Book Value of 0.95 and an EV to EBITDA ratio of 8.08, which suggests that investors are paying a premium relative to its earnings potential. Additionally, the ROCE stands at a low 5.15%, reflecting inefficiencies in generating returns from capital employed.
In comparison to peers, Vestis Corp. has a notably lower EV to EBITDA ratio than its peer with a valuation of risky, which shows a P/E of -35.75 and an EV to EBITDA of 7.41. This suggests that Vestis is not only underperforming relative to its industry but also struggling to create value for shareholders. Furthermore, the stock has significantly underperformed against the S&P 500, with a year-to-date return of -72.77% compared to the index's 12.22%, reinforcing the notion that the stock is overvalued at its current price of 4.15.