EV/EBIT — enterprise value to EBIT
What it measures¶
Enterprise value (EV) is the market capitalisation (share price × number of shares) plus debt, minus cash — what it would cost to take over the whole company. EBIT is earnings before interest and taxes: operating profit, after the yearly write-down of equipment. EV/EBIT divides the first by the second. Read the other way up, EBIT ÷ EV is the earnings yield Joel Greenblatt popularised: the operating return the whole company earns on its price.
Why it is on the page¶
It shares EV/EBITDA's independence from financing, but keeps depreciation in: for a company that must keep replacing machines or buildings, the write-down is a real cost, and EV/EBIT is the fairer measure. It is one of the four multiples of the Workspace's Valuation strip.
Thresholds, their source and the population they were fitted on¶
EV/EBIT is described, never scored:
| Reference | What it shows | Source |
|---|---|---|
| own five-year band | above its 90th percentile, within, or below its 10th percentile — the band of the multiple at the company's last five fiscal year-ends | the company's own stored history; at least three year-ends |
| sector | above, within or below the middle half of similar companies — within 10% of their median where only a median is published | Aswath Damodaran's January industry tables |
- Source of the measure: Joel Greenblatt, The Little Book That Beats the Market (2005), which ranks companies by earnings yield.
- Fitted on: Greenblatt's back-tests of US companies; the summary uses the multiple only to describe position.
- Evidence grade: practitioner convention.
A worked example¶
Apple, on the data stored on 25 October 2026: EV/EBIT of 38.5, above its own band, whose middle was 26.2 over four fiscal year-ends — the Valuation strip reads above; the strip names the denominator beside the figure, on FY2025 EBIT. Honeywell International, on the data stored on 26 October 2026: no EV/EBIT — its share count has fallen 48% since FY2025, beyond its June 2026 split, so no market value is formed, and the strip prints that reason in place of a figure (on 25 October it showed 10.6, priced across two share bases).
Celestica, as the Fundamentals page showed it on 9 August 2026: 43.81, against an EV/EBITDA of 37.46 — the gap is the depreciation of its factories.
What “No verdict” means here¶
EV/EBIT never carries a verdict word. The row reads not applicable when EBIT is zero or negative and insufficient data when debt, cash or EBIT is not stored; the strip says band not available when fewer than three year-ends can form the band, and an EV/EBIT without a figure says why in its place. For a bank or an insurer the strip prints no figure and says enterprise value is not meaningful for a bank (or an insurer): their debt and cash are the business itself, not its financing.
What the verdict is and is not¶
Above its band says the whole company costs more, per unit of operating profit, than at most recent year-ends. It is not a judgement that the price is wrong, not a forecast, and not an instruction to trade the shares.