The EV2EBITDA ratio compares the value of a company, debt and cash included, to the company’s operating income plus depreciation and amortization.
Thanks to a normalization of financial structure and weight of non cash expenses, EV2EBITDA is less variable than PE and it is better suited to compare stocks from different sectors and industries.
The lower the EV2EBITDA, the cheaper the valuation for a company. Another way to look at this ratio is how much cash can the company generate without reinvesting in hard assets.
Formula
EV2EBITDA = EV / EBITDA
These ratios combine line-item filing data with stock prices. The price used in the calculation depends on the period of the financials. The latest close price is used for ratios that involve the latest financials, like the most recent quarter or the latest trailing twelve fiscal months (TTM). For ratios that involve older financials, like the quarter one quarter ago, or the TTM one year ago, the price used for the calculation is the closing price from the first trading day following the period statement's announcement date.
Quarterly values from Income & Cashflow statements are annualized to make the resulting factor more readily comparable with 12-month factors. The annualization is done by multiplying the quarterly figures by approximately 4 (depends on the actual number of days in the period).
You can either use a prebuilt ratio or use the function to define your own.
RatioName(offset,type)
offset: 0-24 (for interim) 0-19 (for annual)
type: QTR (for interim), ANN (for annual), TTM (for trailing twelve months)
For example to screen for stocks whose P/E today is less than their P/E from their previous fiscal 4 quarters enter:
PEExclXor(0,TTM) < PEExclXor(4,TTM)
The above can also be done using prebuilt ratios:
PEExclXorTTM < PEExclXorPTM
Below are the available pre-built ratios with the corresponding parameters for the formula. Please note that availability varies by factor.
|
Period |
Description |
Price |
Line Item |
|
Q |
Recent Quarter |
Close(0) |
(0, QTR) |
|
PQ |
Prior Quarter |
AD+1 * |
(1, QTR) |
|
PYQ |
Prior Year Quarter |
AD+1 * |
(4, QTR) |
|
TTM |
Trailing Twelve Months |
Close(0) |
(0, TTM) |
|
PTM |
Prior TTM |
AD+1 * |
(4, TTM) ** |
|
A |
Recent Annual |
Close(0) |
(0, ANN) |
|
PY |
Prior Year |
AD+1 * |
(1, ANN) |
* AD+1: uses the closing price from the first trading day following the period statement's announcement date. For TTM, the AD is that of the latest quarter which is included in the TTM.
** PTM uses interim periods, so the offset is 4, not 1.
Click here for the Line-Item Reference Spreadsheet.