Is WaveDancer, Inc. overvalued or undervalued?

As of 13 August 2025, the valuation grade for WaveDancer, Inc. has moved from risky to does not qualify, indicating a significant deterioration in its financial standing. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 5.25 and negative EV to EBIT and EV to EBITDA ratios of -1.92 and -1.95, respectively. Additionally, the Return on Equity (ROE) is alarmingly low at -269.58%, reflecting severe inefficiencies in generating profit from equity.
In comparison to its peers, NetSol Technologies, Inc. stands out with a P/E ratio of 39.42, while WaveDancer's valuation metrics are deeply negative, suggesting a stark contrast in performance and market perception. Other peers like Inpixon and Intrusion, Inc. also exhibit negative valuations, but none approach the level of distress seen in WaveDancer. Despite a recent 7.22% return over the past week, the company's one-year return of -32.19% starkly contrasts with the S&P 500's positive 17.14%, reinforcing the notion that WaveDancer is struggling significantly in the current market environment.