What is a good EV/EBITDA?

There is no universal good EV/EBITDA multiple. Use the live S&P 500, sector, distribution, and extremes context as anchors, then check leverage, capital intensity, cash conversion, and growth before calling a multiple cheap or expensive.

What does EV/EBITDA measure?

EV/EBITDA measures enterprise value relative to EBITDA, giving a valuation multiple that includes debt and cash on the value side. It focuses on the whole business rather than only the common equity.

Why use EV/EBITDA instead of P/E?

EV/EBITDA can be useful when comparing companies with different capital structures, tax rates, or depreciation policies. P/E focuses on equity value and net earnings, while EV/EBITDA starts from total enterprise value and an operating earnings measure.

Is lower EV/EBITDA better?

Lower EV/EBITDA can indicate a cheaper valuation, but it may also reflect lower growth, weaker margins, higher cyclicality, or financial risk.

Does EV/EBITDA include debt?

Yes. Enterprise value includes market capitalization plus debt and preferred equity, minus cash and cash equivalents.

What is EV/EBITDA?

The EV/EBITDA ratio compares a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization, valuing the whole operating business independent of capital structure.

EV/EBITDA is a valuation multiple that divides enterprise value by EBITDA. Enterprise value represents the market value of the operating business, including debt and preferred equity and net of cash. EBITDA approximates operating earnings before financing costs, taxes, depreciation, and amortization, which can make the multiple useful for comparing companies with different capital structures.

How to calculate it

Formula

EV/EBITDA = Enterprise Value / Earnings Before Interest, Taxes, Depreciation, and Amortization

Example

Example frame: EV/EBITDA expands when enterprise value rises faster than EBITDA, and contracts when EBITDA improves faster than enterprise value. JPMorgan Chase (JPM) live stock page.

Trailing vs forward variants

Trailing EV/EBITDA uses recent EBITDA, while forward EV/EBITDA uses estimated EBITDA. Forward versions can be useful after a cycle turn, but they rely on forecasts.

Benchmarks

EV/EBITDA is most useful within sectors because margin structure, depreciation, lease burden, and capital intensity vary widely. Use the live S&P 500 benchmark as a broad anchor, then compare the company with businesses that have similar asset intensity and cycle exposure.

Sector comparison

As of Aug 21, 2026 | n=12Median EV/EBITDA by sector

Sector	Median EV/EBITDA	As of
S&P 500	15.64x	Aug 21, 2026
Technology	22.71x	Aug 21, 2026
Industrials	18.64x	Aug 21, 2026
Healthcare	17.46x	Aug 21, 2026
Real Estate	15.84x	Aug 21, 2026
Basic Materials	15.49x	Aug 21, 2026
Consumer Defensive	14.54x	Aug 21, 2026
Consumer Cyclical	14.03x	Aug 21, 2026
Utilities	12.83x	Aug 21, 2026
Communication Services	11.32x	Aug 21, 2026
Financial Services	10.4x	Aug 21, 2026
Energy	9.07x	Aug 21, 2026

Universe distribution

As of Jun 23, 2026 | n=3,797Universe distribution versus S&P 500Typical range is the 25th to 75th percentile: -2.16x to 15.12x. Values outside that band need a business-specific explanation.

Chart view is trimmed to the 5th-95th percentile for readability.

Interpretation

How to read it

Compare EV/EBITDA inside the same sector or industry because depreciation, margins, and capital intensity vary widely.
Check debt, cash, and lease obligations so the enterprise value side reflects the true financing burden.
Pair the multiple with free cash flow, capex needs, and revenue growth before treating a low EV/EBITDA as cheap.

High vs low

A lower EV/EBITDA multiple can indicate a cheaper enterprise valuation, but it can also reflect weaker growth, lower margins, high leverage, cyclicality, or poor cash conversion. A higher multiple can reflect stronger expected growth, higher returns on capital, better margins, or a more resilient business model. The key test is whether EBITDA converts into cash after maintenance capex, working capital, interest, and taxes. The P/E ratio is a more equity-focused valuation multiple.

Reference

Extremes

As of Aug 21, 2026 | sp500Current highest and lowest EV/EBITDAThese are the top and bottom 3 companies in the S&P 500 for this metric.

Highest

Eversource Energy (ES)
Utilities
5,119.2x
EV/EBITDA
Carvana Co. (CVNA)
Consumer Cyclical
1,037.9x
EV/EBITDA
CrowdStrike Holdings, Inc. (CRWD)
Technology
572.9x
EV/EBITDA

Lowest

Ford Motor Company (F)
Consumer Cyclical
-206.3x
EV/EBITDA
International Paper Company (IP)
Basic Materials
-133.9x
EV/EBITDA
Teradyne, Inc. (TER)
Technology
-112.5x
EV/EBITDA

Group	Company	Ticker	Sector	EV/EBITDA	As of
Highest	Eversource Energy	ES	Utilities	5,119.2x	Aug 21, 2026
Highest	Carvana Co.	CVNA	Consumer Cyclical	1,037.9x	Aug 21, 2026
Highest	CrowdStrike Holdings, Inc.	CRWD	Technology	572.9x	Aug 21, 2026
Lowest	Ford Motor Company	F	Consumer Cyclical	-206.3x	Aug 21, 2026
Lowest	International Paper Company	IP	Basic Materials	-133.9x	Aug 21, 2026
Lowest	Teradyne, Inc.	TER	Technology	-112.5x	Aug 21, 2026

Limitations

EV/EBITDA can improve comparability, but it has important limits:

Ignores capital expenditures, which can be material for asset-heavy businesses.
Can overstate cash profitability because EBITDA excludes depreciation and amortization.
Can be less useful for banks and insurers, where debt is part of the operating model.
Does not replace earnings-based valuation for shareholders. Read about P/E Ratio.

EV/EBITDA