Investors should consider value stocks with attractive EV-to-EBITDA ratios for potential growth

From Nasdaq: 2025-05-22 05:52:00

The price-to-earnings (P/E) ratio is a common metric for evaluating stock value, but the EV-to-EBITDA ratio is considered a better substitute. EV-to-EBITDA offers a clearer picture of a company’s valuation and earnings potential. Stocks like NOMD, JAKK, EIX, UPBD, and ROCK have attractive EV-to-EBITDA ratios.

EV-to-EBITDA is the enterprise value divided by earnings before interest, taxes, depreciation, and amortization. It provides a better understanding of a company’s profitability and valuation, considering debt. A lower EV-to-EBITDA ratio suggests undervaluation and can be useful in assessing acquisition targets.

P/E has limitations, such as inability to value loss-making firms or accounting manipulations. EV-to-EBITDA is harder to manipulate, making it useful for assessing highly leveraged or depreciation-heavy companies. However, the ratio varies across industries and may not be suitable for comparing companies in different sectors.

Screening for value stocks involves criteria like low EV-to-EBITDA, P/E, P/B, and P/S ratios, high EPS growth, and Zacks Rank. NOMD, JAKK, EIX, UPBD, and ROCK are top picks meeting these criteria. These companies show growth potential and undervaluation, making them attractive investments.

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To access free stock analysis reports for companies like NOMD, JAKK, ROCK, EIX, and UPBD, visit Zacks’ website. Zacks Investment Research provides valuable insights for investors looking to make informed decisions in the stock market.



Read more at Nasdaq: 5 Value Stocks With Exciting EV-to-EBITDA Ratios to Snap Up Now