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Tap These 5 Bargain Stocks With Impressive EV-to-EBITDA Ratios
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Key Takeaways
EV-to-EBITDA offers a fuller view of valuation by accounting for debt, unlike traditional P/E ratios.
LCUT, CVE, BP, DLTR and PAGP are screened as bargain stocks with low EV-to-EBITDA ratios.
Each stock meets strict criteria, including valuation, trading volume, price, growth, and Value Score.
Investors often focus on the price-to-earnings (P/E) ratio while looking for attractively priced stocks. Easy to compute and widely recognized, it remains one of the most commonly used valuation metrics for estimating a stock’s fair market value. However, despite its widespread use, the P/E ratio comes with certain drawbacks.
Although P/E is the most popular valuation metric, a more complicated multiple called EV-to-EBITDA is often considered a more effective alternative. It provides a clearer picture of a company’s valuation and earnings potential by taking a more comprehensive approach. Although P/E considers a firm’s equity portion, EV-to-EBITDA captures its total value.
EV-to-EBITDA is essentially 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. EBITDA, the other component of the multiple, gives a better idea of a company’s profitability as it removes the impact of non-cash expenses like depreciation and amortization that reduce 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.
Another shortcoming of P/E is that it can’t be used to value a loss-making firm. A company’s earnings are also subject to accounting estimates and management manipulation. On the other hand, EV-to-EBITDA is difficult to manipulate and can also be used to value loss-making but EBITDA-positive companies. 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. Moreover, it can 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 when comparing stocks in different industries, given their diverse capital expenditure requirements.
A strategy solely based on EV-to-EBITDA might not yield the desired results. However, you can club it with the other major ratios in your stock-investing toolbox, such as price-to-book (P/B), P/E and price-to-sales (P/S) to screen bargain stocks.
Screening Criteria
Here are the parameters to screen for bargain stocks:
EV-to-EBITDA 12 Months-Most Recent less than X-Industry Median: A lower EV-to-EBITDA ratio represents a cheaper valuation.
P/E using (F1) less than X-Industry Median: This metric screens stocks that are trading at a discount to their peers.
P/B less than X-Industry Median: A lower P/B compared with the industry average implies that the stock is undervalued.
P/S less than X-Industry Median: The lower the P/S ratio, the more attractive the stock is, as investors will have to pay a smaller price for the same amount of sales generated by the company.
Estimated One-Year EPS Growth F(1)/F(0) greater than or equal to X-Industry Median: This parameter will help in screening stocks that have growth rates higher than the industry median.
Average 20-day Volume greater than or equal to 50,000: The addition of this metric ensures that shares can be traded easily.
Current Price greater than or equal to $5: This parameter will help in screening stocks that are trading at a minimum price of $5 or higher.
Zacks Rank less than or equal to 2: It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have always managed to beat adversities and outperform the market.
Value Score of less than or equal to B: Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Here are our five picks out of the 15 stocks that passed the screen:
Lifetime Brands is a leading global provider of branded kitchenware, tableware and other products. This Zacks Rank #1 stock has a Value Score of A.
Lifetime Brands has an expected year-over-year earnings growth rate of 156.8% for 2026. The Zacks Consensus Estimate for LCUT’s 2026 earnings has moved up 184.9% over the past 60 days.
Cenovus Energy is a leading integrated energy firm with operations comprising marketing the produced oil, natural gas and natural gas liquids. This Zacks Rank #1 stock has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cenovus Energy has an expected year-over-year earnings growth rate of 131.8% for 2026. The Zacks Consensus Estimate for CVE’s 2026 earnings has been revised 11.7% upward over the past 60 days.
BP is an integrated energy company that engages in the oil and gas business globally. This Zacks Rank #1 stock has a Value Score of A.
BP has an expected year-over-year earnings growth rate of 134% for 2026. The consensus estimate for BP’s 2026 earnings has moved up 22.5% over the past 60 days.
Dollar Tree is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. This Zacks Rank #2 stock has a Value Score of A.
Dollar Tree has an expected year-over-year earnings growth rate of 36.4% for the current fiscal year. The Zacks Consensus Estimate for DLTR’s current fiscal-year earnings has been revised 12% higher over the last 60 days.
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminalling and marketing of crude oil and refined products. This Zacks Rank #2 stock has a Value Score of A.
Plains GP Holdings has an expected year-over-year earnings growth rate of 240% for 2026. The consensus estimate for PAGP's 2026 earnings has been revised 148.3% upward over the past 60 days.
View the Zacks #1 Rank List
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Tap These 5 Bargain Stocks With Impressive EV-to-EBITDA Ratios
Key Takeaways
Investors often focus on the price-to-earnings (P/E) ratio while looking for attractively priced stocks. Easy to compute and widely recognized, it remains one of the most commonly used valuation metrics for estimating a stock’s fair market value. However, despite its widespread use, the P/E ratio comes with certain drawbacks.
Although P/E is the most popular valuation metric, a more complicated multiple called EV-to-EBITDA is often considered a more effective alternative. It provides a clearer picture of a company’s valuation and earnings potential by taking a more comprehensive approach. Although P/E considers a firm’s equity portion, EV-to-EBITDA captures its total value.
Lifetime Brands, Inc. (LCUT - Free Report) , Cenovus Energy Inc. (CVE - Free Report) , BP p.l.c. (BP - Free Report) , Dollar Tree, Inc. (DLTR - Free Report) and Plains GP Holdings, L.P. (PAGP - Free Report) are some stocks with impressive EV-to-EBITDA ratios.
Is EV-to-EBITDA a Better Substitute for P/E?
EV-to-EBITDA is essentially 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. EBITDA, the other component of the multiple, gives a better idea of a company’s profitability as it removes the impact of non-cash expenses like depreciation and amortization that reduce 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.
Another shortcoming of P/E is that it can’t be used to value a loss-making firm. A company’s earnings are also subject to accounting estimates and management manipulation. On the other hand, EV-to-EBITDA is difficult to manipulate and can also be used to value loss-making but EBITDA-positive companies. 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. Moreover, it can 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 when comparing stocks in different industries, given their diverse capital expenditure requirements.
A strategy solely based on EV-to-EBITDA might not yield the desired results. However, you can club it with the other major ratios in your stock-investing toolbox, such as price-to-book (P/B), P/E and price-to-sales (P/S) to screen bargain stocks.
Screening Criteria
Here are the parameters to screen for bargain stocks:
EV-to-EBITDA 12 Months-Most Recent less than X-Industry Median: A lower EV-to-EBITDA ratio represents a cheaper valuation.
P/E using (F1) less than X-Industry Median: This metric screens stocks that are trading at a discount to their peers.
P/B less than X-Industry Median: A lower P/B compared with the industry average implies that the stock is undervalued.
P/S less than X-Industry Median: The lower the P/S ratio, the more attractive the stock is, as investors will have to pay a smaller price for the same amount of sales generated by the company.
Estimated One-Year EPS Growth F(1)/F(0) greater than or equal to X-Industry Median: This parameter will help in screening stocks that have growth rates higher than the industry median.
Average 20-day Volume greater than or equal to 50,000: The addition of this metric ensures that shares can be traded easily.
Current Price greater than or equal to $5: This parameter will help in screening stocks that are trading at a minimum price of $5 or higher.
Zacks Rank less than or equal to 2: It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have always managed to beat adversities and outperform the market.
Value Score of less than or equal to B: Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Here are our five picks out of the 15 stocks that passed the screen:
Lifetime Brands is a leading global provider of branded kitchenware, tableware and other products. This Zacks Rank #1 stock has a Value Score of A.
Lifetime Brands has an expected year-over-year earnings growth rate of 156.8% for 2026. The Zacks Consensus Estimate for LCUT’s 2026 earnings has moved up 184.9% over the past 60 days.
Cenovus Energy is a leading integrated energy firm with operations comprising marketing the produced oil, natural gas and natural gas liquids. This Zacks Rank #1 stock has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cenovus Energy has an expected year-over-year earnings growth rate of 131.8% for 2026. The Zacks Consensus Estimate for CVE’s 2026 earnings has been revised 11.7% upward over the past 60 days.
BP is an integrated energy company that engages in the oil and gas business globally. This Zacks Rank #1 stock has a Value Score of A.
BP has an expected year-over-year earnings growth rate of 134% for 2026. The consensus estimate for BP’s 2026 earnings has moved up 22.5% over the past 60 days.
Dollar Tree is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. This Zacks Rank #2 stock has a Value Score of A.
Dollar Tree has an expected year-over-year earnings growth rate of 36.4% for the current fiscal year. The Zacks Consensus Estimate for DLTR’s current fiscal-year earnings has been revised 12% higher over the last 60 days.
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminalling and marketing of crude oil and refined products. This Zacks Rank #2 stock has a Value Score of A.
Plains GP Holdings has an expected year-over-year earnings growth rate of 240% for 2026. The consensus estimate for PAGP's 2026 earnings has been revised 148.3% upward over the past 60 days.