Module II· Trading ComparablesBasic
Question
Which standard multiples do you use in trading comps, and when?
Answer
Standard by sector
- EV/EBITDA: universal, capital-structure neutral
- EV/EBIT: capital-intensive businesses (D&A differences matter)
- EV/Sales: pre-profitability (SaaS, biotech)
- P/E: banks, insurers, REITs
- EV/EBITDAR: lease-intensive (airlines, hotels)
Sector-specific
- Banks: P/Book
- Utilities: EV/MWh
- Mining: EV/Reserves
- Telecom: EV/Pop
Default for industrials
EV/EBITDA + P/E.