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Tap These 5 Bargain Stocks with Alluring EV-to-EBITDA Ratios
Investors are typically fixated on the price-to-earnings (P/E) strategy while seeking stocks trading at attractive prices. This straightforward, easy-to-calculate ratio is the most preferred among all valuation metrics in the investment toolkit for working out the fair market value of a stock. But even this ubiquitously used valuation metric is not without its pitfalls.
Although P/E is the most popular valuation metric, a more complicated multiple called EV-to-EBITDA works even better. Often considered a better alternative to P/E, it gives the true picture of a company’s valuation and earnings potential, and has a more complete approach to valuation. While P/E considers a firm’s equity portion, EV-to-EBITDA determines its total value.
Astrana Health, Inc., KT Corp., Upbound Group, Inc., Noah Holdings Ltd. and DXP Enterprises, Inc. are some stocks with impressive EV-to-EBITDA ratios.
Here’s Why EV-to-EBITDA is a Better Option
Also referred to as enterprise multiple, EV-to-EBITDA is the enterprise value (EV) of a stock divided by its earnings before interest, taxes, depreciation and amortization (EBITDA). EV is the sum of a company’s market capitalization, its debt and preferred stock minus cash and cash equivalents. In essence, it is the entire value of a company. EBITDA, the other element, gives a clearer picture of a company’s profitability by removing the impact of non-cash expenses like depreciation and amortization that dampen net earnings. It is also often used as a proxy for cash flows.
Typically, the lower the EV-to-EBITDA ratio, the more enticing it is. A low EV-to-EBITDA ratio could indicate that a stock is undervalued. Unlike the P/E ratio, EV-to-EBITDA takes debt on a company’s balance sheet into account. For this reason, it is typically used to value acquisition targets. The ratio shows the amount of debt that the acquirer has to bear. Stocks flaunting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates.
P/E can’t be used to value a loss-making firm. A firm’s earnings are also subject to accounting estimates and management manipulation. In contrast, EV-to-EBITDA is harder to manipulate and can be used to value companies that have negative net earnings but are positive on the EBITDA front. EV-to-EBITDA is also a useful tool in measuring the value of firms that are highly leveraged and have a high degree of depreciation. It can also be used to compare companies with different levels of debt.
EV-to-EBITDA is not devoid of limitations and alone cannot conclusively determine a stock’s inherent potential and future performance. The multiple varies across industries and is usually not appropriate while comparing stocks in different industries, given their diverse capital expenditure requirements.
Thus, instead of just relying on EV-to-EBITDA, you can club it with the other major ratios, such as price-to-book (P/B), P/E and price-to-sales (P/S) to achieve the desired results.
Here are our five picks out of the 12 stocks that passed the screen:
Astrana Health is a physician-centric healthcare company committed to delivering high-quality, patient-centered care. This Zacks Rank #1 stock has a Value Score of A.
Astrana Health has an expected earnings growth rate of 76.7% for 2025. The Zacks Consensus Estimate for ASTH’s 2025 earnings has moved up 16.9% over the past 60 days.
KT Corporation is the biggest telecommunications operator in the Republic of Korea. This Zacks Rank #2 stock has a Value Score of A.
KT has an expected earnings growth rate of 280% for 2025. The Zacks Consensus Estimate for KT's 2025 earnings has been revised 2.3% upward over the past 60 days.
Upbound Group is a leading lease-to-own provider with operations in the United States, Puerto Rico and Mexico. This Zacks Rank #2 firm has a Value Score of A.
Upbound Group has an expected year-over-year earnings growth rate of 9.1% for 2025. The consensus estimate for UPBD’s 2025 earnings has been revised 0.5% upward over the past 60 days.
Noah Holdings is a leading wealth management service provider in China. NOAH, a Zacks Rank #2 stock, has a Value Score of A.
Noah Holdings has an expected year-over-year earnings growth rate of 28% for 2025. The consensus estimate for NOAH’s 2025 earnings has been revised 4.6% upward over the past 60 days.
DXP Enterprises provides innovative pumping solutions, supply-chain services, and maintenance, repair, operating and production services. This Zacks Rank #2 firm has a Value Score of B.
DXP Enterprises has an expected earnings growth rate of 17.5% for 2025. The Zacks Consensus Estimate for DXPE’s 2025 earnings has been revised 0.4% higher over the past 60 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Astrana Health, KT, Upbound, Noah Holdings and DXP Enterprises
For Immediate Release
Chicago, IL – July 11, 2025 – The stocks in this week’s article are Astrana Health, Inc. (ASTH - Free Report) , KT Corp. (KT - Free Report) , Upbound Group, Inc. (UPBD - Free Report) , Noah Holdings Ltd. (NOAH - Free Report) and DXP Enterprises, Inc. (DXPE - Free Report) .
Tap These 5 Bargain Stocks with Alluring EV-to-EBITDA Ratios
Investors are typically fixated on the price-to-earnings (P/E) strategy while seeking stocks trading at attractive prices. This straightforward, easy-to-calculate ratio is the most preferred among all valuation metrics in the investment toolkit for working out the fair market value of a stock. But even this ubiquitously used valuation metric is not without its pitfalls.
Although P/E is the most popular valuation metric, a more complicated multiple called EV-to-EBITDA works even better. Often considered a better alternative to P/E, it gives the true picture of a company’s valuation and earnings potential, and has a more complete approach to valuation. While P/E considers a firm’s equity portion, EV-to-EBITDA determines its total value.
Astrana Health, Inc., KT Corp., Upbound Group, Inc., Noah Holdings Ltd. and DXP Enterprises, Inc. are some stocks with impressive EV-to-EBITDA ratios.
Here’s Why EV-to-EBITDA is a Better Option
Also referred to as enterprise multiple, EV-to-EBITDA is the enterprise value (EV) of a stock divided by its earnings before interest, taxes, depreciation and amortization (EBITDA). EV is the sum of a company’s market capitalization, its debt and preferred stock minus cash and cash equivalents. In essence, it is the entire value of a company. EBITDA, the other element, gives a clearer picture of a company’s profitability by removing the impact of non-cash expenses like depreciation and amortization that dampen net earnings. It is also often used as a proxy for cash flows.
Typically, the lower the EV-to-EBITDA ratio, the more enticing it is. A low EV-to-EBITDA ratio could indicate that a stock is undervalued. Unlike the P/E ratio, EV-to-EBITDA takes debt on a company’s balance sheet into account. For this reason, it is typically used to value acquisition targets. The ratio shows the amount of debt that the acquirer has to bear. Stocks flaunting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates.
P/E can’t be used to value a loss-making firm. A firm’s earnings are also subject to accounting estimates and management manipulation. In contrast, EV-to-EBITDA is harder to manipulate and can be used to value companies that have negative net earnings but are positive on the EBITDA front. EV-to-EBITDA is also a useful tool in measuring the value of firms that are highly leveraged and have a high degree of depreciation. It can also be used to compare companies with different levels of debt.
EV-to-EBITDA is not devoid of limitations and alone cannot conclusively determine a stock’s inherent potential and future performance. The multiple varies across industries and is usually not appropriate while comparing stocks in different industries, given their diverse capital expenditure requirements.
Thus, instead of just relying on EV-to-EBITDA, you can club it with the other major ratios, such as price-to-book (P/B), P/E and price-to-sales (P/S) to achieve the desired results.
Here are our five picks out of the 12 stocks that passed the screen:
Astrana Health is a physician-centric healthcare company committed to delivering high-quality, patient-centered care. This Zacks Rank #1 stock has a Value Score of A.
Astrana Health has an expected earnings growth rate of 76.7% for 2025. The Zacks Consensus Estimate for ASTH’s 2025 earnings has moved up 16.9% over the past 60 days.
KT Corporation is the biggest telecommunications operator in the Republic of Korea. This Zacks Rank #2 stock has a Value Score of A.
KT has an expected earnings growth rate of 280% for 2025. The Zacks Consensus Estimate for KT's 2025 earnings has been revised 2.3% upward over the past 60 days.
Upbound Group is a leading lease-to-own provider with operations in the United States, Puerto Rico and Mexico. This Zacks Rank #2 firm has a Value Score of A.
Upbound Group has an expected year-over-year earnings growth rate of 9.1% for 2025. The consensus estimate for UPBD’s 2025 earnings has been revised 0.5% upward over the past 60 days.
Noah Holdings is a leading wealth management service provider in China. NOAH, a Zacks Rank #2 stock, has a Value Score of A.
Noah Holdings has an expected year-over-year earnings growth rate of 28% for 2025. The consensus estimate for NOAH’s 2025 earnings has been revised 4.6% upward over the past 60 days.
DXP Enterprises provides innovative pumping solutions, supply-chain services, and maintenance, repair, operating and production services. This Zacks Rank #2 firm has a Value Score of B.
DXP Enterprises has an expected earnings growth rate of 17.5% for 2025. The Zacks Consensus Estimate for DXPE’s 2025 earnings has been revised 0.4% higher over the past 60 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2570914/tap-these-5-bargain-stocks-with-alluring-ev-to-ebitda-ratio
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.