Is higher Ev/Sales better or lower?
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
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.
Voluptas molestiae et ut ut. Nihil dolores et qui ut enim culpa aut. Reiciendis est dolore id ducimus aut qui molestiae. Cupiditate quia consequuntur iusto recusandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...