P/CFPS vs. EV/EBITDA
Regarding relative valuation for the equity of a company, should both of these be used or just one since they are both cash flow multiples?
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EV/EBITDA is not a cash flow multiple
Your question lacks context. EV/EBITDA and P/CFPS look at two completely different things and are non-mutually exclusive to each other. Unlike P/CFPS (dependent on market movement), EV/EBITDA is a "non-market" valuation multiple, and would appropriately be used in the case of a capital-intensive company with substantially large D&A expenses.
what the fuck are you talking about? EV/EBITDA multiples are certainly market driven. it changes daily, just like price per share does. how the fuck do you think you arrive at EV? I'll give you a hint, equity value is in that calc. and oh wait, equity value is the numerator in the other multiple OP was referring to. you should be banned from commenting.
Take a deep breath
i fucking lol'd bro
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I am talking about what the maindifferences are between deriving a target share price from a relative P/CFPS approach vs. deriving a target share price from a relative EV/EBITDA multiple (obviously backing into an equity value from your calculated Enterprise Value)
Read this: //www.wallstreetoasis.com/forums/ebitda-vs-operating-cash-flow-vs-free-ca…
"The key OPERATIONAL distinction between EBITDA and CFO/OCF is the Change in Net Working Capital. CFO/OCF are also burdened by taxes and interest expense."
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