Which valuation metrics to use?
I'm trying to do a comparable companies analysis for a company in the industrial sector and was wondering what ratios/metrics I should be using for companies in this industry and why.
So far, I've decided to use:
EV/EBITDA
EV/Revenue
FCF/Share
FCF Yield
Dividend Yield
P/E
Debt/EBITDA
Am I right to be using these ratios or should some be altered/added/removed?
Thanks in advance.
Why would you need 7 different comp co valuations?
Typically your compco valuation should be using only 1 type of multiple. I've seen other multiples (TEV/Rev) just for reference, but it rarely drives the valuation itself.
Also metrics vary depending on industry. For different reasons, some metrics are more appropriate than others in a given industry. For example in a FIG deal you wont see an EBITDA multiple, it'll probably be a Price/Book multiple of some sort.
If you don't know what you should be using, check out a few equity research reports for a few of the comps and see what analysts are using to value the company.
For an industrial, TEV/EBITDA should suffice.
Ad provident doloribus blanditiis error sequi. At magni repudiandae provident sed voluptate iusto aut eos. Nostrum est exercitationem cupiditate fugiat veniam sit quo.
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...