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Valuation Metrics Valuation Metrics & Multiples – Quick Reference http://breakingintowallstreet.com Applicable to

Valuation Metrics

Valuation Metrics & Multiples – Quick Reference

http://breakingintowallstreet.com

Applicable to Most Companies / Industries

Revenue

Revenue

-

EBIT

Earnings Before Interest & Taxes

Operating Income (1)

EBITDA

Earnings Before Interest, Taxes, Depreciation & Amortization

Operating Income (1) + Depreciation + Amortization

Net Income

Net Income

Pre-Tax Income * (1 – Tax Rate)

EPS

Earnings Per Share

Net Income / Weighted Average Diluted Shares Outstanding

Levered FCF

Levered Free Cash Flow

Cash Flow from Operations – CapEx – Mandatory Debt Principal Repayments

Unlevered FCF

Unlevered Free Cash Flow

EBIT * (1 – Tax Rate) + Non-Cash Expenses That Appear in Cash Flow from Operations – Increase in Working Capital – CapEx

BV

Book Value

Total Assets – Goodwill – Other Intangible Assets – Liabilities (2)

Examples of Industry-Specific Metrics

Retail / Airline Companies:

EBITDAR

Earnings Before Interest, Taxes, Depreciation, Amortization & Rent

EBITDA + Rental Expense

Oil & Gas Companies:

EBITDAX

Earnings Before Interest, Taxes, Depreciation, Amortization & Exploration Expense

EBITDA + Exploration Expense

Proved Reserves

How much – in millions of barrels of oil- equivalent – the company is certain to extract in future years.

-

Daily Production

How much in barrels of oil-equivalent (Boe) energy the company is producing each day.

-

Real Estate Investment Trusts (REITs):

 

FFO

Funds from Operations

Net Income + Depreciation – Gain on Property Sales

AFFO

Adjusted Funds from Operations

Net Income + Depreciation – Gain on Property Sales – CapEx

Internet Companies:

UV

Unique Visitors

-

PV

Pageviews

-

Notes: Valuation Metrics & Multiples – Quick Reference http://breakingintowallstreet.com (1) Usually you add back

Notes:

Valuation Metrics & Multiples – Quick Reference

http://breakingintowallstreet.com

(1) Usually you add back non-recurring charges (e.g. Restructuring expenses) and other non-cash expenses (e.g. Stock-Based Compensation) to Operating Income for EBIT and EBITDA. (2) Usually you look at Book Value on a per-share basis, so you would divide BV by Shares Outstanding.

Valuation Multiples

Multiple Name:

Used For:

NOT Used For:

EV / Revenue

Used for many types of companies; most important for unprofitable ones

Banks, financial institutions

EV / EBIT

Used for many types of companies; most important for those with high CapEx / D&A

Banks, financial institutions, retail, airlines

EV / EBITDA

Used for many types of companies; most important for those with low CapEx / D&A

Banks, financial institutions, retail, airlines

P

/ E

Used for many types of companies; important for banks and financial institutions

Private companies; unprofitable companies

Equity Value / Levered FCF

Very rare because it is capital structure- dependent; might be used in distressed or heavy debt scenarios

Most companies

Enterprise Value / Unlevered FCF

Used when CapEx, Working Capital, or Deferred Revenue are important; also critical in DCFs

Banks, financial institutions

P

/ BV

Used for “Balance Sheet-Centric” companies such as banks and financial institutions

Anything other than banks and financial institutions

Examples of Industry-Specific Multiples

EV / EBITDAR

Retail, Restaurant, and Airline Companies

If everyone owns their buildings or if everyone rents their buildings

EV / EBITDAX

Oil & Gas, Mining, and Natural Resource Companies

Non-Oil & Gas/Mining/Natural Resource Companies

EV / Proved Reserves

EV / Daily

 

Production

 

P

/ FFO per Share

Real Estate Investment Trusts (REITs)

Non-REITs

P

/ AFFO per Share

EV / Unique Visitors

Internet Companies (usually less profitable or pre-revenue ones)

Non-Internet Companies

EV / Pageviews