Is Worthington Steel, Inc. overvalued or undervalued?

As of 9 May 2025, Worthington Steel, Inc. has moved from a fair to attractive valuation grade, indicating a positive shift in its market perception. The company is currently undervalued, with a P/E ratio of 10, significantly lower than the industry average, which suggests potential for growth. Key ratios include an EV to EBITDA of 6.01 and a Price to Book Value of 1.30, both of which reinforce the attractiveness of the company's valuation.
In comparison to peers, Worthington Steel's P/E ratio of 10.34 is lower than that of its competitor, which has a P/E of 12.5, indicating that Worthington may offer a better value proposition. Additionally, the company’s ROCE stands at 15.29%, showcasing efficient capital utilization compared to the industry average. Despite recent underperformance relative to the S&P 500, where Worthington has seen a YTD decline of 21.12% against a 2.44% gain for the index, the current valuation metrics suggest that the stock is positioned for recovery and growth.