Is Zedge, Inc. overvalued or undervalued?

As of 12 June 2023, the valuation grade for Zedge, Inc. has moved from expensive to risky, indicating a shift in perception towards the company's financial health. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 1.41 and an EV to Sales ratio of 0.68, which suggests that the market may be pricing in more value than the company's fundamentals support. Additionally, Zedge's negative ROCE of -18.90% and ROE of -1.39% further reinforce concerns about its profitability and operational efficiency.
In comparison to its peers, Zedge's EV to EBITDA ratio of 19.94 stands out as significantly higher than Duos Technologies Group, Inc. at -19.0920 and GAN Ltd. at 22.4895, both of which are also classified as risky. Furthermore, while Zedge has shown positive returns over the past year with a 1.26% increase, it underperformed against the S&P 500's 17.14% return in the same period, which suggests that investors may need to reassess the stock's valuation in light of its competitive position and financial performance.