Is Vital Energy, Inc. overvalued or undervalued?

As of 19 February 2025, the valuation grade for Vital Energy, Inc. has moved from attractive to risky, indicating a significant shift in its perceived value. The company is currently deemed overvalued, with a P/E ratio of 2, which is substantially lower than its peers such as Comstock Resources, Inc. at 166.82 and Gulfport Energy Corp. at 8.03. Additionally, Vital's EV to EBITDA stands at 2.42, while the industry average appears to be considerably higher, further supporting the overvaluation assessment.
In comparison to its peers, Vital Energy's ROCE of 9.48% and ROE of 13.93% do not provide a compelling case for its current valuation, especially when juxtaposed with Northern Oil & Gas, Inc., which has a more favorable valuation grade and lower P/E ratio of 5.74. The company's stock has also underperformed significantly against the S&P 500 over various periods, notably a 1-year return of -55.91% compared to the index's 10.26%. This performance reinforces the conclusion that Vital Energy, Inc. is currently overvalued in the market.