Hi,
I had plenty of questions on trading comps.
When you look at , say, the current EBITDA multiple for company A and the forward NTM multiple of company A
If the current multiple is 3x and the forward multiple is 2x, how do you interprete that ? do you say, well the enterprise value is going to decline?
thanks a lot!!
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no - ebitda is going up, ev stays what it is
okay thanks, does that mean that investors are looking for companies with low ebitda multiple?
In a way it does, but that is not how it works. We don't look for any multiple, we value the company, get an EV and then we look at what EBITDA multiple is based on our valuation.
When EBITDA multiple goes down, means that the company is increasing profitabilty, i.e. EV / EBITDA is growing and EV is not changing. Basic math.
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