Is Woodward, Inc. overvalued or undervalued?

As of 31 January 2025, the valuation grade for Woodward, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived valuation. The company is currently overvalued, with a P/E ratio of 42, a Price to Book Value of 6.96, and an EV to EBITDA of 30.85. These ratios are notably higher than those of its peers, such as Pentair plc, which has a P/E of 21.53, and Graco, Inc., with a P/E of 28.63, highlighting the premium at which Woodward is trading.
In comparison to the industry, Woodward's PEG ratio of 3.42 further emphasizes its overvaluation, as it exceeds the typical range for growth stocks. The company's recent stock performance has outpaced the S&P 500, with a year-to-date return of 45.22% compared to the S&P 500's 2.44%. This strong performance, while impressive, does not justify the current high valuation levels, reinforcing the conclusion that Woodward, Inc. is overvalued.