Enterprise Value to EBITDA

The Enterprise Value to EBITDA Ratio, or EV / EBITDA Ratio contrasts a company’s Enterprise Value relative to its EBITDA. It is defined as Enterprise Value divided by EBITDA. This is measured on a TTM basis.

Stockopedia explains EV / EBITDA

EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It is a measure of a company’s earnings before they are subjected to non cash costs such as Depreciation and Amortisation and before the cost of Interest and Tax, which are not related directly to operational performance. EV/EBITDA is similar to - and often used in conjunction with - the PE Ratio to value a company but is arguably a better ratio for comparable multiples analysis.

This is because EV is capital structure-neutral in that it includes debt. Furthermore, EBITDA measures cash earnings without accrual accounting, cancelling tax-jurisdiction effects, and cancelling the effects of different capital structures.

It is purely driven by the business operations of the company whereas the PE multiple can be impacted by non-business factors of a discretionary or non-recurring nature. This is measured on a TTM basis.

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The 5 highest EV / EBITDA Stocks in the Market

TickerNameEV / EBITDAStockRank™
LON:STBSecure Trust Bank-56.2083
LON:N91Ninety One-43.0891
LON:MTROMetro Bank Holdings-19.3947
LON:ARBBArbuthnot Banking-12.8576