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Strategies & Market Trends : Value Investing
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To: rjm2 who wrote (13108)9/24/2001 6:21:53 PM
From: Bob Rudd  Read Replies (1) of 78516
 
Peter: Good to see you back. Good point on DA. I use EV/EBITDA because it's better than PE [figures debt], is commonly used as a buyout measure, and the EBITDA is right on the yahoo profile, so it's quick & convenient. That said, EBITDA has many shortcomings and you've correctly focused on an important one in this biz, IMO. Restaurants that aren't remodeled on a fairly regular basis tend to get stale. If the restaurant leases facilities then the depreciation probably nails or even understates this regular expense. OTOH, if the restaurant owns the building, in a decent location, then depreciation is somewhat offset by property appreciation [sort of analagous to FFO with REITS].
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