Disclaimer

The information contained in the website is solely intended for professional investors. Some funds shown on this website fall outside the scope of the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and therefore do not (need to) have a license from the Authority for the Financial Markets (AFM).

The funds shown on this website may not be available in your country. Please select your country website (top right corner) to view the products that are available in your country.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

Please confirm that you are a professional investor and/or institutional investor and that you have read, understood and accept the terms of use for this website..

I Disagree
EBITDA/EV the most powerful value measure

EBITDA/EV the most powerful value measure

11-05-2015 | From the field

Academics typically define value as the ratio of a company’s book value to market value (B/M), but this is just one of many possible ways to define value. A paper by Gray and Vogel * empirically compares the performance of various alternative value measures and finds EBITDA/EV (earnings before interest, taxes, depreciation and amortization to total enterprise value) to be the most powerful one, with a performance almost double that of traditional B/M.

  • David Blitz
    David
    Blitz
    Head Quantitative Equities Research

Although this may be news to academic researchers, we are actually not surprised by this finding, because we have always included a wide range of valuation measures in our research database, and also found EBITDA/EV to be among the most effective ones. In fact, this variable has been included in some of our models for over a decade already. Thus, we see this research as an example of academic literature catching up with known insights among practitioners, rather than the other way around.

Stay up-to-date on Quant insights
Subscribe
From the field
From the field

Our researchers publish many whitepapers based on their own empirical studies; they also follow quantitative research done by others. Head of Quant Equities Research David Blitz comments on notable external papers.

Read all articles
Subjects related to this article are: