Bruwin , yes the EV/EBIT is a valuation, not a quality metric. Tobias Carlisle calls is the acquirers multiple, since it is the inverse of the pre tax yield on EV value. Just like all valuation metrics it changes on a daily basis. Tobias claims, that selecting stocks based on this simpler formula leads to outperformance, it is similar Joel Greenblatts magic formula, which takes both ROE and EV/ EBIT into account, but allegation outperforms the magic forums a bit.
I am not plugging it here, but you can sign up at his website to get screening results for large caps and it yields value stocks that have been mentioned here and elsewhere - FCAU, M, MGA, HPQ, BIIB, MU. Outlooks varies, at is it not really accounted for, but they do screen cheaply. |
