Hi,
When you look at manufacturing cmopanies with large capital expenditures and related D&A, is EV/EBITDA better because you can compare the companies before capex differences or is EV/EBIT because you can compare the companies after taking into account their capex?
Thanks
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I would say you want to use EBITDA whenever possible because it takes away the manipulation that D&A can bring into play. It allows you to compare more definite numbers.
I would definitely use EBIT.. You must take into account the effect Capex has on a company, especially if that company is 'capex intensive'.. As Warren buffet famously says "do companies think the tooth fairy pays for capital expenditures"
So you read that Vault guide too?
Haha not vault but have read others
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