Enterprise Value / Sales
Enterprise value-to-sales (EV/S) is an indicator that compares the enterprise value (EV) of a company to its annual revenue.
Like another indicator from this group, EV/EBITDA, this multiplier allows to evaluate the business in terms of the scale and attractiveness of its operating activities.
The EV/S multiple is similar to the P/S multiple, however, instead of the company's capitalization, the company's real value is taken into account (that is, capitalization + debt - cash).
The multiple is used to compare a company with other industry peers. If the EV/S of the company is below the industry average, then its shares are considered undervalued.
According to Ranks methodology, this indicator is analyzed in the Value block and used along with other indicators to calculate the score. The indicator is presented as a % of repurchased shares.
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