Revenue multiples in retail sector coverage investment banking

Hi,

I am wondering if anyone can explain why revenue multiples (Price/Sales & EV/Sales) are particularly important to retail sector. Some people say that sales are important to retail sector but I guess sales are important everywhere.

Also, is it ok to use Price/Sales multiple despite internal inconsistency? EV/Sales seems to make sense more. Which multiple do you use in practice? Price/Sales or EV/Sales?

Many thanks in advance.

2 Comments
 

I also want to add to this post.

How do you know what multiples to use for what type of company and why? I looked in BIWS and they list some multiples but no-where does it explain which to use e.g. use P/E for high growth companies (im making this up - idk if you do). I know its a 'guess' at times but ther must be some rough guidelines right? e.g. when do you us Enterprise Value / Revenue etc?

Thanks!

 
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