Valuation benchmark · 11 GICS sectors
EV/EBITDA by Industry: 2026 Sector Benchmarks
EV/EBITDA multiples range from 6x in Energy to 22x in Technology. This table shows the median multiple, typical range, and the key driver for each of the 11 S&P 500 GICS sectors — so you can instantly benchmark any stock against its industry peers. Once you have the sector context, use the EV/EBITDA Calculator to run a live multiple comparison for any ticker.
2026 data · 11 GICS sectors
EV/EBITDA Medians by Sector
| Sector | Median EV/EBITDA | Typical Range | Key Driver |
|---|---|---|---|
| Technology | 22.0x | 14x – 35x | Asset-light software and semiconductor companies command premium multiples; hardware manufacturers sit at the low end. |
| Healthcare | 14.5x | 10x – 24x | Large pharma anchors the median; biotech and medical-device companies with high R&D spend trade at wider dispersion. |
| Financials | — | — | EV/EBITDA is not meaningful for banks and insurers. Use Price/Book or Price/Earnings instead. |
| Consumer Discretionary | 13.0x | 8x – 22x | E-commerce and luxury brand operators trade above 18x; auto OEMs and specialty retailers sit well below median. |
| Consumer Staples | 15.0x | 11x – 20x | Earnings stability and defensive cash flows justify a resilience premium; private-label manufacturers sit at the low end. |
| Industrials | 13.5x | 9x – 20x | Aerospace & defense and industrial automation trade above the midpoint; freight and trucking at a discount. |
| Energy | 6.5x | 4x – 10x | Commodity price volatility keeps multiples compressed; integrated majors trade above E&P pure-plays on margin stability. |
| Materials | 8.5x | 5x – 13x | Specialty chemicals trade at a premium to mining and commodity processors due to pricing power and margin durability. |
| Real Estate | 18.0x | 14x – 24x | REIT structures mean EV/EBITDA (and EV/EBITDARE) reflects lease duration and asset class — data-center REITs trade highest. |
| Utilities | 10.5x | 8x – 14x | Rate-regulated earnings cap multiple expansion; regulated electric utilities cluster near the sector median. |
| Communication Services | 11.0x | 7x – 18x | Streaming and digital-advertising platforms sit above median; legacy telecom carriers trade at a significant discount. |
How to Use EV/EBITDA Sector Benchmarks
Enterprise value to EBITDA (EV/EBITDA) is the practitioner's valuation multiple of choice for cross-company comparison. Unlike P/E, it is capital-structure neutral: a highly-levered company and a net-cash company with identical operating businesses show the same EV/EBITDA. That makes it especially useful when comparing companies within a sector where leverage varies widely — energy, real estate, and industrials all fit this description.
Step 1: Find the right row. Identify which GICS sector your company belongs to. Use the GICS classification (available on most financial data providers), not a rough intuition — a semiconductor company goes in Technology, but a semiconductor equipment manufacturer may go in Industrials depending on its primary revenue source. The right sector matters because medians vary by 3x across the table.
Step 2: Locate the company within the range. If the sector median is 13x and a company trades at 9x, the first question is why. Is it a capital-allocation problem (excessive capex suppressing EBITDA)? A cyclical business where current EBITDA is unsustainably high? A competitive disadvantage that the market has priced in? Or genuine undervaluation? The range column gives you the typical spread — if the company is below the bottom of the range, that warrants deep investigation.
Step 3: Adjust for the company's specific leverage. EV/EBITDA does not net out capex, so capital-intensive companies look cheaper on EV/EBITDA than they deserve. A steel manufacturer at 8x EV/EBITDA may need to reinvest 40% of EBITDA in maintenance capex, leaving free cash yield well below what the headline multiple implies. EV/EBIT or EV/EBITDA-capex (sometimes called EV/EBITDA less capex, or a clean "owner earnings" multiple) can correct for this in heavy-capex sectors.
Step 4: Compare over time. A company's current multiple relative to its own 5-year range is as informative as cross-sectional peer comparison. A utility at 12x may look above median today, but if it has historically traded at 10–14x with a 12x midpoint, the current multiple is exactly in line with history. Use both dimensions — cross-section and time series —before drawing a valuation conclusion.
For a live multiple on any specific ticker, use the EV/EBITDA Calculator which pulls current EV and LTM EBITDA from market data and shows how the company compares to its sector peers in real time.
What Drives Each Sector's Multiple
Technology (22x median)
Asset-light economics and recurring software revenue justify elevated multiples. EBITDA margins expand as revenue scales, so the market pays for forward EBITDA, not trailing. When growth slows, the multiple compresses faster than the underlying business deteriorates.
Real Estate (18x median)
REIT structures and long-term leases create bondlike cash flows that command duration premium. Data-center and industrial REITs trade at the top of the range on secular demand tailwinds; retail and office REITs sit at the bottom.
Consumer Staples (15x median)
Defensive cash flows through recessions, pricing power, and global brand moats justify a resilience premium over GDP-cyclical sectors. The multiple narrows when input cost inflation compresses margins faster than price increases can recover.
Healthcare (14.5x median)
Diversified large-cap pharma and medical devices anchor the median; high R&D biotech companies trade at wider ranges. Patent cliffs, drug pricing risk, and generics competition are the primary multiple suppressors.
Industrials (13.5x median)
Defense and automation trade above median on secular backlog visibility; freight and trucking at a cyclical discount. The sector is sensitive to interest rates (through capital equipment demand) and infrastructure spending.
Energy (6.5x median)
Commodity price uncertainty and high capital reinvestment needs keep multiples structurally depressed. Markets apply a "cycle skepticism" discount: even when oil is high and EBITDA looks elevated, investors assume mean reversion and value on mid-cycle earnings.
Common EV/EBITDA Mistakes to Avoid
Mistake: Cross-sector comparison
Comparing a technology company at 22x to an energy company at 6x and calling the energy company "cheap" is the most common misuse of EV/EBITDA. The multiples reflect fundamentally different business models, growth rates, and capital requirements. Comparing across unrelated sectors produces meaningless conclusions. Always compare within the same sector.
Mistake: Using EBITDA for capital-intensive businesses
A mining company that depreciates $500M per year of equipment has a very different real earnings power than the EBITDA implies. Adding back depreciation makes sense for software (where capex is minimal) but not for businesses that must replace physical assets to stay competitive. EV/EBIT or EV/FCF is more appropriate for capital-intensive sectors.
Mistake: Peak-cycle EBITDA
Cyclical companies show their lowest EV/EBITDA at peak earnings — right before the cycle turns. An energy company at 4x EV/EBITDA when oil is $120/barrel looks cheap; the same company at 4x when oil returns to $70 has a 70%+ EBITDA cut embedded in the price. Always benchmark EBITDA against mid-cycle estimates, not trailing-twelve-months at the peak.
Mistake: Ignoring debt in the EV
A company with $2B in net debt and a $4B market cap has a $6B EV, not $4B. Investors who compare market cap to EBITDA understate the true multiple and overstate value. Always verify that the Enterprise Value includes all funded debt (including off-balance-sheet leases under ASC 842), preferred equity, and minority interests, net of cash and short-term investments.
Common questions
EV/EBITDA — answered directly.
What is a good EV/EBITDA ratio?
There is no universal 'good' EV/EBITDA — it depends entirely on the sector. A 6x multiple is expensive for an energy E&P company if commodity prices are peaking, but cheap for a healthcare company with durable pricing power. The right benchmark is the sector median for that company's industry, not the market average. Compare horizontally (same sector peers) and over time (the company's own 5-year range), and always ask why a multiple diverges from the sector — is it a real competitive advantage, or a temporary earnings distortion?
Why is EV/EBITDA better than P/E for comparing companies?
EV/EBITDA is capital-structure neutral — it puts levered and unlevered companies on the same footing. A company with $500M of debt and one with none could show very different P/E ratios even with identical operating businesses, because interest expense reduces net income. EV/EBITDA eliminates that distortion by using Enterprise Value (equity + debt − cash) and EBITDA (operating earnings before interest). It is also useful for companies with heavy depreciation, since EBITDA adds back a non-cash charge. However, it ignores capex, which makes it less reliable for capital-intensive industries.
Why do tech companies have higher EV/EBITDA multiples?
Technology companies trade at high EV/EBITDA multiples because the market prices in fast EBITDA growth, high incremental margins, and reinvestment returns that exceed the cost of capital by a wide margin. A software company growing EBITDA at 25% per year trades at 22x today but only 9x on projected earnings three years out — if that growth materializes. The multiple also reflects asset quality: software cash flows are recurring, contractual, and not tied to physical assets that depreciate. When growth disappoints, these multiples compress sharply.
Why is EV/EBITDA not useful for financial companies?
Banks, insurers, and other financial intermediaries treat interest expense as a cost of goods sold, not a financing expense. EBITDA adds back interest, which for a bank would strip out its largest operating cost. Enterprise Value also becomes circular for banks because their debt (deposits, borrowings) is core to the business model, not an optional capital structure decision. Use Price/Book for banks (because book value approximates liquidation value of the loan portfolio) or Price/Earnings, which at least captures net interest margin in the denominator.
How does EV/EBITDA change across market cycles?
EV/EBITDA multiples compress during recessions because EBITDA holds up better than earnings — so the denominator does not collapse as fast as in a P/E ratio — but equity risk premiums rise, which lowers valuation multiples. Cyclical sectors like energy and materials show the most violent swings: energy may trade at 4x at peak-cycle EBITDA when earnings are inflated, then re-rate to 10x+ when EBITDA normalizes downward. Counter-intuitively, a low cyclical EV/EBITDA at the peak of the commodity cycle is often a warning sign, not a buying opportunity.
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