Is Xponential Fitness, Inc. overvalued or undervalued?

As of 3 August 2023, the valuation grade for Xponential Fitness, Inc. has moved from fair to risky, indicating a shift towards a more negative outlook. The company appears to be overvalued, particularly given its P/E ratio of 17, which is higher than the peer average of approximately 13.32 for similar companies. Additionally, the EV to EBITDA ratio stands at 8.76, while peers like Afya Ltd. show a more attractive ratio of 6.38, further suggesting that Xponential Fitness is not competitively priced in its industry.
In comparison to its peers, European Wax Center, Inc. has a P/E ratio of 16.93, which is also indicative of a more favorable valuation. The company's recent stock performance has been poor, with a year-to-date return of -39.03% compared to the S&P 500's 12.22%, reinforcing the notion that the stock may be overvalued relative to its market performance.