Is Welltower, Inc. overvalued or undervalued?

As of 11 February 2025, Welltower, Inc. has moved from an expensive to a very expensive valuation grade. The company is currently overvalued, as indicated by its high P/E ratio of 83, an EV to EBITDA of 30.35, and a Price to Book Value of 2.92. These figures suggest that the stock is trading at a significant premium compared to its earnings and assets.
In comparison to its peers, Welltower's P/E ratio is substantially higher than American Tower Corp.'s 34.12 and Prologis, Inc.'s 26.72, both of which are considered fairly valued. Additionally, the company's ROCE of 4.59% and ROE of 3.51% further highlight the inefficiency in generating returns relative to its high valuation. Despite recent strong stock performance, with a 1-year return of 50.63% compared to the S&P 500's 10.26%, the valuation metrics suggest that investors may be overestimating future growth potential.