EV/EBITDA

A valuation multiple comparing a company's total value (enterprise value) to its operating earnings — used to compare companies independent of capital structure.

The EV/EBITDA ratio (Enterprise Value divided by EBITDA) is one of the most widely used valuation multiples in professional investing. Because it uses Enterprise Value (which includes debt) in the numerator and EBITDA (which is pre-interest) in the denominator, it allows apples-to-apples comparison between companies with very different debt levels.

A lower EV/EBITDA generally means cheaper valuation, but context matters. Capital-intensive industries like utilities or telecom trade at lower multiples (6–10x) than software companies (15–30x+) because of different growth rates and reinvestment needs. In M&A, EV/EBITDA is the primary yardstick for acquisition pricing.

Example: If Company A has an EV of $10 billion and EBITDA of $500 million, it trades at 20x EV/EBITDA. If its closest competitor trades at 14x EV/EBITDA with similar growth prospects, Company A may be overvalued relative to peers.

Every stock deep-dive in BMInsider's 100X Insider Reports includes an EV/EBITDA breakdown with industry peer comparisons to put the multiple in context.

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EV/EBITDA

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