Value Factors


This ratio is the opposite of EBITDA/EV and was added to the screener to solve an important flaw. When sorting companies based on EBITDA/EV, companies with a small enterprise value and positive EBITDA will show up at the top of the list but as soon as the EV becomes negative, the stock will drop to the bottom of the list. Similarly, stocks with a negative EBITDA and a negative EV are likely to feature at the top of the list.

To prevent this behavior, we created the EV/EBITDA ratio. Stocks with a negative EBITDA get a blank score and by sorting stocks ascending, stocks where the EV becomes negative don't get sent to the bottom of the list.

We calculate the EV/EBITDA as follows:

EV/EBITDA = Enterprise Value EBITDA

Stocks with an EBITDA <= 0 automatically get a blank score.

EV/EBITDA interpretation: What number are we looking for? A low value is good, a high value is bad.