Basedonthesepredictions,Sarantisisundervaluedbyabout
55%(withanEV/capitalratioof2.22)andChristianDiorby
about 43% (with an EV/capital ratio of 2.10).
ILLUSTRATION 9.5: Comparing EV/Sales Multiples
Revenue multiples are used widely to analyze retail
companies, but they are versatile enough to work in any
sector where there are significant differences in margins
acrosscompanies.Inthefollowingtable,wecomparetheEV/
revenuemultiplesofspecialtychemicalcompanieslistedin
different European markets:
Snia Spa, which has the next to lowest enterprise
value-to-sales ratio, also has the most negative operating
margin. At the other extreme, Victrex, with the highest
enterprise value-to-sales ratio of 5.16, has the highest
after-tax operating margin of 22.75%.