S&P 500 EV/EBITDA (Enterprise Multiple) by Sector/Industry

The table below lists the average Enterprise Multiple (EV/EBITDA) by sector. The multiples are calculated using the current and past S&P 500 companies. Comparing the current enterprise multiple of a sector/industry to its historical average value can be used to estimate if the sector is currently undervalued or overvalued. Note: Real Estate sector is combined with Financials sector.

To examine the multiples by GICS Industry or by an individual company, check the Researcher Dataset provided by Siblis Research.

S&P 500 - EV/EBITDA Multiple by Sector

Purchase GICS Sector and Industry specific EV/EBITDA multiples for the last day of each month since 3/31/1995 (including P/B, P/E & CAPE ratios since 12/31/1979) and do your own sector valuation analysis.

To examine the valuation multiples of all current and past S&P 500 companies, purchase the S&P 500 Researcher Dataset by Siblis Research which includes EV/EBITDA multiples since 3/31/1995 and P/E and P/B ratios since 12/31/1979 for all the companies. The data includes also quarterly earnings, share prices, outstanding shares, market caps, enterprise values, total returns & component weights of the companies since 3/31/1979. Examine what the dataset looks like.

Check also the US Comparable Public Companies dataset that provides Free Cash Flow Yields, P/E Ratios, EV/EBITDA Multiples, Growth Rates and Market Caps of all current & past Russell 3000 companies (altogether 8,599 different companies).

EV/EBITDA Enterprise Multiple

It is easy to see a strong negative correlation between the average EV/EBITDA multiple of Industrials sector and the sector performance. When the multiple has been low, 3-year forward returns have been high (note that the axis of returns is flipped). The forward return means the rate of return during the period of three years from the point of investment.

How the EV/EBITDA multiple by sector is calculated?

The EBITDA multiple for a specific sector is calculated by dividing the total enterprise value of all sector companies by the total sum of annual EBITDA of the companies. The multiples on the table above are trailing twelve months, meaning the last four quarters are used when earnings before interest, taxes, depreciation and amortization are calculated.

Using EV/EBITDA to value companies

Enterprise value to EBITDA is a popular multiple that is used to measure the value of a corporation. The ratio can be seen as a capital structure-neutral alternative for Price/Earnings ratio. When valuations of different companies are compared to each other, the enterprise multiple is often considered more suitable than P/E. Using P/E ratio for comparative analysis can be misleading due to different amounts of leverage, different accounting practices related to depreciation and different tax rates.

The multiple is most commonly used to evaluate industrial and consumer industries. It is more rare to use the ratio for financial or energy companies. For oil & gas companies, there are various industry specific valuation multiples like EV to Reserves, EV to Production and EV to Capacity. Banks and insurance companies are most commonly evaluated using price-to-book ratio.