Is Winmark Corp. overvalued or undervalued?

As of 14 April 2020, Winmark Corp. has moved from a very attractive to a risky valuation grade. The company appears to be overvalued based on its current metrics. The P/E ratio stands at 37, while the industry average is higher at approximately 38.17, indicating a slight premium. The EV to EBITDA ratio is 28.25, which is also on the higher side compared to its peers, suggesting that investors may be paying too much for each unit of earnings before interest, taxes, depreciation, and amortization.
In addition, the PEG ratio is significantly high at 34.52, which raises concerns about future growth expectations not being met. Winmark's return on equity (ROE) is negative, reflecting poor profitability relative to its equity base. Compared to peers like Winmark Corp. with a P/E of 38.17 and an EV to EBITDA of 28.99, it is evident that Winmark Corp. is not only underperforming but also carries a higher risk profile. Despite a positive long-term return of 138.77% over five years, the recent stock performance shows a decline of 8.91% over the past week, further supporting the view that the stock is currently overvalued.