Most investors “price” the stocks of companies by using valuation multiples instead of “valuing” them based on future cash flows and fundamentals.
29.04.2024 | 06:25 Uhr
We address what multiples miss and why they have become less informative. We examine how the two most popular multiples, P/E and EV/EBITDA, can provide different signals about a stock’s relative attractiveness. We then take a deep look at EV/EBITDA. We do not discourage the use of multiples, but users should understand the underlying value drivers.
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