TurningtoEV/EBITDAmultiples,weobtainthefollowing
outputfromtheregressionagainstthetaxrate,reinvestment
rate,returnoncapital,andexpectedgrowthrateinrevenues
(g).Thefirstthreewerecomputedfromthefilingsfromthe
mostrecentfinancialyearandthelast(expectedgrowthrate
in revenues) was a consensus estimate from analysts.
The R-squared of the regression is 50.9 percent.
Whilewedonot wantto maketoomuchofdifferencesin
R-squareds, the R-squareds on the operating income
regressions tend to be higher than those reported for the
equity earnings regressions, in general, and the P/E ratio
regressions, in particular. This would indicatethat we can
explain differences in operating income multiples with
fundamentalsalittlebetterthanwecanexplaindifferencesin
equity multiples.
EV/Capital Ratios
Is the link between value-to-book and return on capital
strongerorweakerthanthelinkbetweenprice-to-bookand
returnonequity?Toexaminethisquestion,weregressedthe
enterprise value-to-invested capital ratio against return on
capital using data on all firms in the United States from
January 2006.