Why EV/Sales and EV/EBITDA Can Disagree

EV/Sales measures enterprise value against revenue. EV/EBITDA measures the same numerator against a smaller earnings denominator. The difference starts with margins.

The connection is arithmetic

When the dates, enterprise value and accounting definitions match, EV/EBITDA equals EV/Sales divided by the EBITDA margin. Doubling the margin halves EV/EBITDA if EV/Sales stays unchanged. That is why the two ratios can move in different directions.

Separate a ratio from its historical rank

On October 22, 2026, our pipeline’s latest weekly observation for GE Vernova (GEV) showed 5.8x EV/Sales and 79.8x EV/EBITDA. These are two denominators for one business, not conflicting price estimates. Its spin-off also limits how much standalone history is comparable.

Each percentile uses that measure’s own valid weekly observations. EV/Sales and EV/EBITDA can have different histories when EBITDA is negative or unavailable in some periods. A rank gap can reflect both margin changes and different samples. Open each measure’s chart before comparing the percentiles.

EBITDA still needs scrutiny

EBITDA excludes depreciation and amortization but does not pay for replacement equipment. A factory can report rising EBITDA while free cash flow remains weak because capital spending is high. Company-adjusted EBITDA may remove costs that our trailing calculation retains.

Emerson (EMR) had an EV/Sales observation but unavailable EV/EBITDA in the October 22 pipeline review because the filings did not support the required gross-interest add-back. We leave that measure empty rather than infer it from another ratio.

Use the same basis

Compare the same company, observation date and trailing period. Then check margins, capital spending and which weeks qualify for each rank. The US Manufacturing theme groups businesses with different capital intensity; a low ratio in one layer is not directly comparable with another.