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EBITDA multiples by industry

EBITDA multiple is a financial metric used to evaluate a company's financial health and overall value. EBITDA multiples can vary significantly by industry, making it essential to understand industry-specific EBITDA multiples when evaluating companies in different industries.

EBITDA multiple is calculated using two metrics: EBITDA and Enterprise value (EV). EBITDA multiples, or also known as EV/EBITDA, are calculated by dividing a company's enterprise value by its EBITDA, the formula is as follows:

EBITDA multiple = EV / EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is calulated like this:

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortisation

Enterprise value (EV) is sometimes also referred as the total value of the company. Enterprise value (EV) is basically a modification of market capitalisation value adjusted for the company debts and cash.

EV = Market Capitalisation + Total Debt – Cash and Equivalents

EBITDA multiples are a useful tool for comparing companies in the same industry, evaluating a company's value, and making informed investment decisions. However, investors should be aware of the limitations of EBITDA multiples and consider other important factors when evaluating a business, such as a company's management team, competitive positioning, and market trends.

EBITDA Multiples by Industries

Here is a table showing EBITDA multiples by industries in the US as of May 2025:

Industry Average EBITDA Multiple Number of companies
Advertising Agencies 10.81 23
Aerospace & Defense 15.53 52
Agricultural Inputs 12.17 11
Airlines 10.41 11
Aluminum 6.95 4
Apparel Manufacturing 12.87 16
Apparel Retail 10.38 29
Asset Management 12.6 77
Auto Manufacturers 6.09 13
Auto Parts 7.74 44
Auto & Truck Dealerships 11.25 13
Banks - Diversified 15.88 6
Banks - Regional 9.4 286
Beverages - Non-Alcoholic 18.94 12
Biotechnology 12.15 497
Broadcasting 8.09 14
Building Materials 14.31 8
Building Products & Equipment 11.68 28
Business Equipment & Supplies 9.8 7
Capital Markets 13.91 36
Chemicals 11.33 18
Communication Equipment 17.49 43
Computer Hardware 16.97 25
Conglomerates 14.1 12
Consulting Services 14.87 17
Consumer Electronics 13.67 11
Credit Services 13.33 43
Department Stores 7.05 5
Diagnostics & Research 17.36 59
Discount Stores 15.55 8
Drug Manufacturers - General 12.32 12
Drug Manufacturers - Specialty & Generic 12.75 44
Education & Training Services 11.87 17
Electrical Equipment & Parts 14.59 41
Electronic Components 14.12 32
Electronics & Computer Distribution 10.54 6
Engineering & Construction 14.44 30
Entertainment 13.75 38
Farm & Heavy Construction Machinery 10.8 21
Farm Products 8.54 15
Financial Data & Stock Exchanges 19.75 11
Food Distribution 12.34 9
Footwear & Accessories 10.55 11
Furnishings, Fixtures & Appliances 9.4 21
Gambling 8.36 11
Gold 9.97 28
Grocery Stores 11.75 10
Healthcare Plans 9.62 11
Health Information Services 17.84 32
Home Improvement Retail 12.52 7
Household & Personal Products 13.39 26
Industrial Distribution 15.21 17
Information Technology Services 14.79 52
Insurance Brokers 14.91 12
Insurance - Diversified 11.16 12
Insurance - Life 10.63 14
Insurance - Property & Casualty 10.81 37
Insurance - Reinsurance 7.17 8
Insurance - Specialty 8.29 17
Integrated Freight & Logistics 11.55 14
Internet Content & Information 22.87 41
Internet Retail 16.31 25
Leisure 14.05 24
Lodging 15.45 9
Luxury Goods 9.92 5
Marine Shipping 5.94 24
Medical Care Facilities 15.22 39
Medical Devices 14.73 93
Medical Distribution 15.55 6
Medical Instruments & Supplies 16.96 43
Metal Fabrication 11.96 12
Mortgage Finance 18.78 17
Oil & Gas Drilling 8.8 7
Oil & Gas E&P 5.19 61
Oil & Gas Equipment & Services 6.46 47
Oil & Gas Integrated 7.44 5
Oil & Gas Midstream 9.18 35
Oil & Gas Refining & Marketing 10.3 17
Other Industrial Metals & Mining 13.17 17
Packaged Foods 14.7 42
Packaging & Containers 11.86 18
Paper & Paper Products 9.01 5
Personal Services 12.01 10
Pollution & Treatment Controls 16.82 10
Publishing 12.86 7
Railroads 12.15 8
Real Estate - Development 13.71 10
Real Estate Services 15.26 25
Recreational Vehicles 13.7 14
REIT - Diversified 13.42 20
REIT - Healthcare Facilities 17.03 17
REIT - Hotel & Motel 10.33 15
REIT - Industrial 15.81 16
REIT - Mortgage 20.63 39
REIT - Office 16.03 23
REIT - Residential 17.35 18
REIT - Retail 14.97 23
REIT - Specialty 17 16
Rental & Leasing Services 9.97 20
Residential Construction 7.74 20
Resorts & Casinos 11.57 17
Restaurants 13.78 43
Scientific & Technical Instruments 17.65 23
Security & Protection Services 10.8 14
Semiconductor Equipment & Materials 18.97 25
Semiconductors 19.59 64
Software - Application 29.99 183
Software - Infrastructure 21.42 94
Solar 18.34 15
Specialty Business Services 11.99 26
Specialty Chemicals 13.14 44
Specialty Industrial Machinery 15.42 77
Specialty Retail 12.12 38
Staffing & Employment Services 14.73 23
Steel 13.37 14
Telecom Services 11.29 32
Thermal Coal 5.65 8
Tobacco 14.88 5
Tools & Accessories 12.51 10
Travel Services 11.25 10
Trucking 7.88 12
Utilities - Diversified 10.99 15
Utilities - Regulated Electric 12.16 24
Utilities - Regulated Gas 10.79 14
Utilities - Regulated Water 12.94 13
Utilities - Renewable 11.73 10
Waste Management 20.23 11

As shown in the table, the Software - Application industry has the highest average EBITDA multiple of 29.99x, followed by Internet Content & Information at 22.87x. In contrast, the Oil & Gas E&P industry has the lowest average EBITDA multiple of 5.19x. These differences in EBITDA multiples highlight the importance of understanding industry-specific factors that affect a company's financial health and performance.

Industries with lowest EBITDA Multiple

Industries with the lowest EBITDA Multiple are presented in the chart and table below. The chart also allows filtering by sector so you can explore the industry EBITDA Multiple ranking in each sector.

Industry Average EBITDA Multiple Number of companies
Oil & Gas E&P 5.19 61
Thermal Coal 5.65 8
Marine Shipping 5.94 24
Auto Manufacturers 6.09 13
Oil & Gas Equipment & Services 6.46 47
Aluminum 6.95 4
Department Stores 7.05 5
Insurance - Reinsurance 7.17 8
Oil & Gas Integrated 7.44 5
Auto Parts 7.74 44

Industries with highest EBITDA Multiple

Industries with the highest EBITDA Multiple are shown in the following chart and table. You can further refine the industries in the chart by sector.

Industry Average EBITDA Multiple Number of companies
Software - Application 29.99 183
Internet Content & Information 22.87 41
Software - Infrastructure 21.42 94
REIT - Mortgage 20.63 39
Waste Management 20.23 11
Financial Data & Stock Exchanges 19.75 11
Semiconductors 19.59 64
Semiconductor Equipment & Materials 18.97 25
Beverages - Non-Alcoholic 18.94 12
Mortgage Finance 18.78 17

Factors that Influence EBITDA Multiples

Several factors can influence EBITDA multiples, including:

  • Industry-specific factors
  • Market trends
  • Company-specific factors
  • Macro economic conditions

Understanding these factors can help investors evaluate a company's EBITDA multiples accurately and make informed investment decisions.

Why EBITDA Multiples are Different Across Industries

EBITDA multiples are different across industries because of various factors that affect the company's financial health and performance that are specific to that industry. For instance, industries with high growth potential, high margins, and low levels of competition tend to have higher EBITDA multiples. On the other hand, industries with low growth potential, low margins, and high levels of competition tend to have lower EBITDA multiples. Some of the factors that affect EBITDA multiples across industries include:

Barriers to Entry

Industries with high barriers to entry (commonly referred as business moats) tend to have high EBITDA multiples. This is because companies in these industries are perceived as protected from new competitors, which leads to higher profit margins and revenue growth rates.

Examples of industries with high barriers to entry include the healthcare, technology, airlines, telecommunications, and pharmaceutical industries. These industries have significant obstacles or costs for new entrants to establish themselves, such as extensive regulation, high capital requirements, strong intellectual property protection, and expertise required to develop and maintain innovative products or services. This makes it challenging for new companies to enter the market and compete with established players.

Capital Intensity

Industries that require significant capital expenditures tend to have low EBITDA multiples. This is because the high capital requirements lead to lower profit margins, which results in lower EBITDA multiples.

The oil and gas, manufacturing, utilities, construction, and transportation industries are examples of capital-intensive industries that require significant investments in physical assets such as machinery, equipment, and facilities. These investments can be a significant barrier to entry for new companies, as they require substantial capital and access to financing. Companies in these industries must make ongoing investments in order to remain competitive and maintain their operations.

Competition

Industries with high levels of competition tend to have lower EBITDA multiples. This is because companies in these industries face pressure to keep prices low, which results in lower profit margins and revenue growth rates.

The retail, food and beverage, hospitality, advertising and media, and transportation industries are examples of highly competitive industries with low EBITDA multiples. These industries have intense competition, resulting in lower profitability and valuations. Companies in these industries must focus on cost control, differentiation, and innovation to remain competitive and profitable. Investors tend to value companies in these industries based on factors beyond just EBITDA multiples, such as growth potential, market share, and management expertise.

Advantages and Limitations of EBITDA Multiples

EBITDA multiples have several advantages and limitations when used to asses a company value. EBITDA multiples are a popular method for valuing businesses due to their simplicity and ease of derivation from financial statements.

Advantages of EBITDA Multiples

  • EBITDA multiples are straightforward and easy to calculate.
  • EBITDA multiples are a useful tool for comparing companies in the same industry.
  • EBITDA multiples can be useful for evaluating a company's financial health.

Using EBITDA multiples however has some limitations, such as not providing a direct value for the business and being subject to approximation based on peer metrics. Additionally, since EBITDA is not officially defined by accounting regulations, it is vulnerable to misrepresentation and carries a significant risk of error. Therefore, while EBITDA multiples offer a quick and easy way to determine value, investors must exercise caution and consider other factors when evaluating a business's true worth.

Limitations of EBITDA Multiples

  • EBITDA multiples do not consider a company's capital structure.
  • EBITDA multiples can be misleading if a company has high debt levels or significant non-recurring expenses.
  • EBITDA multiples do not consider a company's growth potential.

When are EBITDA multiples by industry useful

EBITDA multiples are useful for evaluating stocks or making portfolio decisions when there is comparability. Meaning we are comparing very similar businesses, with similar capital structure that operate in a similar way, such as in the case of income-producing properties with uniform comparable properties. However, it becomes difficult to use EBITDA to determine value for tangible and intangible assets that lack comparability. In rare situations, EBITDA can be used by making adjustments and comparisons. In most other situations, such as comparing two technology companies with different market demographics and consumer markets, making comparisons with EBITDA can be difficult.