EV/EBITDA (Enterprise Value/EBITDA)
Contents
Key points
- It is considered fairer than P/E for comparing companies with different leverage.
- A low EV/EBITDA suggests the company is cheap relative to its operating profit; a high ratio implies growth expectations or overvaluation.
- the ratio is meaningless when EBITDA is negative or tiny.
Formula / calculation
Enterprise value = Market capitalisation + Net financial debt (debt − cash); EV/EBITDA = Enterprise value / Annualised EBITDA. EBITDA is operating profit plus depreciation and amortisation.
Live example
- EV/EBITDA
- 7.00
- THYAO
- Last price
- 290.75 TL
- Daily change
- 0.00%
- Market cap
- TRY 401.2B
Interpretation
A low EV/EBITDA suggests the company is cheap relative to its operating profit; a high ratio implies growth expectations or overvaluation. It is the primary valuation yardstick in capital-intensive sectors such as industry, energy and retail.
Pitfalls
the ratio is meaningless when EBITDA is negative or tiny. The EBITDA concept does not apply to banks and insurers. Lease liabilities (IFRS 16) raise both debt and EBITDA, so cross-company comparisons need care. Read it with net debt/EBITDA and EBITDA margin.
Low EV/EBITDA Stocks
| Stock | EV/EBITDA | Daily |
|---|---|---|
1. ULUUNUlusoy Un Sanayi | 0.06 | 0.00% |
2. TRENJTr Dogal Enerji | 0.70 | 0.00% |
3. HDFGSHedef Girişim | 1.02 | 0.00% |
4. DOHOLDogan Holding | 1.65 | 0.00% |
5. INDESIndeks Bilgisayar | 1.65 | 0.00% |
6. PRDGSPardus Girişim | 1.65 | 0.00% |
7. BIZIMBizim Mağazaları | 1.84 | 0.00% |
8. DGATEDatagate Bilgisayar | 1.98 | 0.00% |
9. DAPGMDap Gayrimenkul | 2.00 | 0.00% |
10. ISYATİş Yat. Ort. | 2.07 | 0.00% |
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Frequently asked questions
What is EV/EBITDA (Enterprise Value/EBITDA)?
EV/EBITDA divides a company’s total value including debt (enterprise value) by earnings before interest, tax, depreciation and amortisation, giving a valuation independent of capital structure.
How is EV/EBITDA (Enterprise Value/EBITDA) calculated?
Enterprise value = Market capitalisation + Net financial debt (debt − cash); EV/EBITDA = Enterprise value / Annualised EBITDA. EBITDA is operating profit plus depreciation and amortisation.
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