Is WaveDancer, Inc. overvalued or undervalued?

As of 9 February 2022, the valuation grade for WaveDancer, Inc. has moved from expensive to risky, indicating a significant shift in its financial outlook. The company is currently considered overvalued, particularly given its P/E ratio is not applicable due to losses, and it has a Price to Book Value of 5.25, which is notably high. Additionally, the EV to Sales ratio stands at 8.69, reflecting a premium despite the company's negative performance metrics, including an ROE of -269.58%.
In comparison to peers, WaveDancer's valuation ratios are concerning. For instance, Intrusion, Inc. has a P/E of -5.09, while NetSol Technologies, Inc. is in a more favorable position with a P/E of 26.34, highlighting the stark contrast in valuation within the industry. Furthermore, the recent stock performance has been poor, with a 1-year return of -59.26% compared to a 10.26% return for the S&P 500, reinforcing the notion that WaveDancer is not only overvalued but also struggling significantly in the market.