Valuation benchmark · 12 sectors
EV/Revenue by Industry (2024 Benchmarks)
EV/Revenue multiples vary by a factor of 20x across sectors — SaaS and cloud platforms trade at 7x or more on recurring, high-margin revenue while commodity-intensive businesses sit near 1x. This table shows the median EV/Revenue ratio and typical range for 12 sectors so you can judge whether a growth stock is cheap or rich relative to peers. Use the EV/Revenue calculator to compute the ratio for any ticker, or explore EV/EBITDA benchmarks for a profitability-adjusted view.
2024 data · 12 sectors
EV/Revenue Benchmarks by Sector
| Sector | Median EV/Rev | Typical Range | Notes |
|---|---|---|---|
| Technology (SaaS & Cloud Software) | 7.2x | 2x–25x | Pure-play cloud software and subscription platforms trade at 10x–25x on 70%+ gross margins and high retention; mature software and IT services at 2x–5x |
| Technology (Hardware & Semiconductors) | 3.5x | 1x–8x | Fabless chip designers at 5x–8x on IP-driven margins; equipment makers and contract manufacturers at 1x–3x on capital intensity and lower gross margins |
| Healthcare (Biotech & Pharma) | 4.2x | 0.3x–18x | Commercial-stage biotech with high-margin specialty drugs at 6x–18x; large integrated pharma at 3x–6x; pre-revenue clinical-stage companies excluded |
| Healthcare (Devices & Services) | 3x | 1x–8x | High-margin implantables and diagnostics at 5x–8x; hospital systems and managed care at 0.5x–2x on thin margins and high revenue pass-through |
| Consumer Discretionary | 1.3x | 0.3x–5x | Premium e-commerce platforms at 3x–5x; luxury brands at 2x–4x; auto OEMs and broadline retailers at 0.3x–0.8x on thin margins and high revenue volume |
| Consumer Staples | 1.6x | 0.7x–3x | Branded food and beverage companies at 2x–3x on pricing power and steady demand; private-label and commodity-exposed operators at 0.7x–1.2x |
| Energy | 1.1x | 0.4x–2.5x | Integrated majors at 0.8x–1.5x through the cycle; midstream MLPs at 2x–2.5x on contracted cash flows; E&P compresses below 0.5x at commodity troughs |
| Industrials | 1.9x | 0.6x–5x | Defense primes and precision automation at 2x–5x on durable backlogs; heavy equipment and freight at 0.6x–1.2x on capital intensity |
| Materials | 0.9x | 0.3x–2.5x | Specialty chemicals at 1.5x–2.5x; bulk commodity producers near 0.3x–0.8x on price-cycle volatility and minimal pricing power |
| Utilities | 2.2x | 1.3x–4x | Regulated electric utilities at 1.5x–2.5x on predictable cash flows; clean-energy growth utilities with large investment pipelines near 3x–4x |
| Real Estate (REITs) | 6.8x | 2x–18x | Data-center and cell-tower REITs at 10x–18x on low capex-to-revenue; industrial and multifamily REITs at 5x–9x; office and retail REITs at 2x–5x |
| Communication Services | 2.6x | 0.6x–9x | Streaming and digital advertising platforms at 5x–9x on high-margin subscription and ad revenue; legacy telecom carriers at 0.6x–1.5x on capex-heavy infrastructure |
How to Use EV/Revenue Benchmarks
The EV/Revenue ratio measures how much the market pays for each dollar of a company's revenue, expressed on an enterprise-value basis that accounts for debt. It is most useful for companies that are not yet profitable, where P/E and EV/EBITDA multiples are negative or meaningless. A SaaS company with 80% gross margins growing at 40% annually is worth far more than its EBITDA suggests — and EV/Revenue captures that potential.
Margins matter as much as the multiple. Two companies at 5x EV/Revenue can be in completely different positions. If one has 75% gross margins and is approaching profitability, the multiple is reasonable. If the other has 35% gross margins and is burning cash, 5x may be expensive. To normalize for margin differences, divide EV/Revenue by the gross margin percentage — the result is an EV/Gross-Profit multiple that allows fairer comparisons across business models. See the EV/Revenue calculator to compute both figures for any ticker.
Growth rates justify the premium — or don't. A company growing revenue at 50% annually with a 5x EV/Revenue multiple is cheaper than one growing at 10% at the same multiple. The "Rule of 40" (growth rate + profit margin ≥ 40%) is a common shorthand for SaaS quality, but the underlying logic applies broadly: you should pay a higher revenue multiple for faster, higher-quality growth. If you cannot see a credible path from today's revenue to sufficient profitability to justify the multiple, that is a warning sign regardless of the sector benchmark. Use the DCF calculator to model the implied expectations at current prices.
Always compare EV/Revenue within the same sector and sub-sector. A SaaS company at 5x is discounted relative to peers; a materials company at 5x is at a significant premium. Use the sector row in the table above as your reference, then adjust for the company's specific growth rate and margin profile.
How to Use This Data
1. Normalize for gross margins
Divide EV/Revenue by the gross margin to get an EV/Gross-Profit multiple. A 10x revenue company at 80% gross margins is at 12.5x gross profit — similar to a 5x revenue company at 40% gross margins at 12.5x gross profit. This adjustment puts asset-light software and capital-intensive businesses on a more level playing field for comparison.
2. Adjust for growth rate
Divide the EV/Revenue multiple by the forward revenue growth rate (as a decimal) to get the PEG-equivalent for revenue — sometimes called the "EV/Revenue-to-growth" ratio. A 10x multiple at 50% growth (ratio: 0.2) is cheaper than a 5x multiple at 15% growth (ratio: 0.33). Fast growers with high multiples can still be undervalued; slow growers with modest multiples can still be overpriced. See the EV/EBITDA guide for the profitability-adjusted framework.
3. Screen for sector outliers
Use the EV/Revenue screener to find companies trading at the low or high end of their sector range. Low-end outliers in high-growth sectors can signal overlooked value; high-end outliers in mature sectors can signal overvaluation or a genuine business-model shift that hasn't yet been priced by consensus. Always check the reason before acting — cheap in a good sector can still be a value trap.
Common questions
EV/Revenue ratio — answered directly.
What is the EV/Revenue ratio?
EV/Revenue (enterprise value to revenue) divides a company's total enterprise value — market cap plus net debt — by its annual revenue. Unlike P/E or EV/EBITDA, it doesn't require profitability, which makes it especially useful for valuing high-growth, pre-profit companies. A technology company burning cash but growing revenue at 50% annually is better evaluated on a revenue multiple than on earnings it doesn't yet have. The tradeoff: EV/Revenue says nothing about margins. A 5x company with 80% gross margins and strong free cash flow conversion is fundamentally different from one at 5x with 30% gross margins and negative FCF — the ratio alone doesn't distinguish them.
What is a good EV/Revenue multiple?
It depends entirely on the sector, growth rate, and margin profile. As a rough framework: below 1x often reflects a mature, low-growth, or low-margin business; 2x–5x is typical for profitable growth companies; 5x–15x is reserved for high-conviction businesses with durable competitive advantages and high gross margins. A SaaS company growing at 30% annually with 75% gross margins can rationally trade at 8x–12x revenue. Use the table above to judge the multiple against sector-specific ranges rather than an absolute threshold — a 3x EV/Revenue is expensive for an energy company but cheap for a biotech.
How is EV/Revenue different from the P/S ratio?
The P/S (price-to-sales) ratio uses market capitalization in the numerator; EV/Revenue uses enterprise value, which adds net debt and subtracts cash. For companies with significant debt or cash, the difference is material. A leveraged company with $1B in revenue, $500M market cap, and $1B in debt has a P/S of 0.5x but an EV/Revenue of 1.5x. EV/Revenue is the more accurate valuation multiple because it captures the full cost of acquiring the business — equity plus debt. Use P/S for quick screening; use EV/Revenue for serious valuation work, especially when comparing companies with different capital structures.
Why do SaaS companies trade at 10x revenue or more?
Three structural reasons make high EV/Revenue multiples rational for software businesses. First, gross margins of 70–85% mean a large share of each revenue dollar falls to the bottom line — the revenue multiple implicitly prices high future profitability. Second, software revenue is sticky: once a customer integrates a tool into their workflow, switching costs are high and net revenue retention exceeds 100% at the best platforms. Third, the marginal cost of serving an additional customer is near zero, so revenue growth compounds into operating leverage over time. To sanity-check the multiple, divide EV/Revenue by the gross margin to get a gross-profit multiple — a 10x revenue company at 80% gross margins is trading at 12.5x gross profit, which is demanding but not irrational if growth sustains.
Related Tools & Resources
EV/Revenue Calculator
Compute the EV/Revenue ratio for any ticker and compare it to sector benchmarks.
EV/Revenue Screener
Screen for stocks trading at low or high EV/Revenue multiples relative to sector peers.
EV/EBITDA Guide
The profitability-adjusted counterpart to EV/Revenue — when to use each metric and why.
EV/EBITDA Calculator
Calculate EV/EBITDA for any ticker to pair with the revenue-based view above.
Deep analysis · any ticker
See how a company's EV/Revenue stacks up — and what it implies.
Basis Report generates a decision-ready analysis: EV/Revenue trend, gross margin profile, growth rate context, sector benchmark positioning, and valuation implications — all in one document.
Generate a free report