forgive me if this sounds stupid, but I've always thought a lower Ev/sales multiple is better when you compare companies with each other.
But it looks like a higher multiple would also suggest more growth? curious how you would compare these multiples for companies in comps table
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Look at the variance between the actual EVs, this will give more insight as to the differences in multiples.
At least in TMT, low sales multiple USUALLY is tied to businesses with structural issues. I have lost money in a few "cheap tech" names.
So it's a lot more than just a quantitative excise - have to evaluate the multiple against the fundamental outlook of the business.
thanks richard, curious why low sales multiple usually suggests structural issues?
It's more structural issues translate to lack of investor interest hence lower multiple, or those businesses keep missing numbers so investors just fleeing.
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