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EV/EBITDA Has Only Been Higher in the US Before the Dot-Com Bubble Burst

What follows below are some charts looking at the EV/EBITDA and subsequent returns in the US market. Charts were presented on 18 December 2018 in our Global FVMR strategy.

EV/EBITDA has only been higher in the US before the dot-com bubble burst


  • From 1990 until 30 November 2018, the US market’s total return index was up to 1,521 from 100
  • EV/EBITDA of 12.9x, which is not impacted by a tax cut
  • EV/EBITDA has only been higher before the dot-com bubble burst


Low probability of positive subsequent returns at current EV/EBITDA range


  • Current EV/EBITDA range has historically occurred 13% of months and generated positive subsequent returns:
  • 1 year: 38% of the time
  • 2 years: 21% of the time
  • 3 years: 21% of the time
  • 5 years: 39% of the time


Historically, EV/EBITDA at this high level has led to negative subsequent returns on average


  • Current EV/EBITDA of 12.9x, this range has historically given the following average subsequent returns:
  • 1 year: (5%)
  • 2 years: (9%) p.a.
  • 3 years: (6%) p.a.
  • 5 years: 1% p.a.


The US market has traded in cheaper EV/EBITDA ranges 87% of the past 336 months


  • Current EV/EBITDA of 12.9x
  • The market has traded within this EV/EBITDA range in 13% of the months since December 1990
  • The market has traded cheaper in 87% of months since December 1990


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