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EV/EBITDA - forward or trailing?

Hey guys,

I am looking for your experience of what is usually  done in practice. 

When calculating EV/EBITDA multiples do you usually use the trailing EBITDA figure or next year’s forecasted EBITDA figure?


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Well, you can use either but then that will change the multiple comparison, it might depend on the scenario.  Standard practice is forward but things like normalized EBITDA are common during transitions, cyclical periods, etc.

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Depends which supports your thesis :-D

when you are evaluating an investment, you are trying to estimate then dcf  future earnings. the best way to predict the future is to look at the past. 

but to your question. most pros use forward earnings by analysts. the issue with those estimates is that they have a severely positive bias. i would also watch out for people that use adjusted eps. 

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