Valuation benchmark · 20 industries
EV/EBIT Ratio by Industry: 2026 Sector Benchmarks
EV/EBIT multiples range from 13x in Energy to 42x in Software. Unlike EV/EBITDA, this ratio keeps depreciation and amortization in the denominator — making D&A drag visible and providing a more conservative read on capital-intensive businesses. This table shows the median multiple, typical range, and key driver across 20 industries so you can benchmark any stock against its sector peers. Use the EV/EBIT Calculator to run a live multiple comparison for any ticker, or see the EV/EBITDA Guide for a full explanation of enterprise value multiples.
2026 data · 20 industries
EV/EBIT Medians by Industry
| Industry | Median EV/EBIT | Typical Range | Key Driver |
|---|---|---|---|
| Technology | 32.0x | 18x – 48x | Asset-light software and semiconductor companies command the highest multiples; hardware OEMs sit near the low end where capital intensity erodes EBIT margins. |
| Software | 42.0x | 28x – 65x | Pure-play SaaS businesses trade at the widest premium — recurring revenue, 70%+ gross margins, and minimal D&A produce EBIT that grows faster than revenue. |
| Healthcare Services | 19.0x | 13x – 32x | Large pharma anchors the median; hospital operators trade below 15x on reimbursement pressure while specialty pharma can exceed 30x. |
| Biotech/Pharma | 26.0x | 18x – 45x | Pipeline optionality and patent-protected pricing push multiples well above the healthcare median; generic manufacturers sit at the low end. |
| Medical Devices | 28.0x | 18x – 40x | High regulatory moats and recurring consumable revenue justify premiums; capital-intensive imaging equipment makers trade near the floor. |
| Financials | — | — | EV/EBIT is not meaningful for banks and insurers — interest expense is a cost of goods, not a financing cost. Use Price/Book or Price/Earnings instead. |
| Banking | — | — | Net interest margin is the core operating metric; EV/EBIT adds back interest, stripping out the largest revenue driver. Use P/B (< 1x = distressed, 1–2x = normal). |
| Insurance | — | — | Combined ratio and return on float are the relevant metrics. EV/EBIT is structurally misleading for insurance businesses. |
| Consumer Discretionary | 17.5x | 10x – 30x | Luxury brand operators and e-commerce platforms trade near 25x; auto OEMs and traditional retailers sit well below the sector median. |
| Retail | 18.0x | 11x – 28x | Specialty and luxury retail trade above 22x on brand pricing power; mass-market grocery and discount retail anchor the low end under thin EBIT margins. |
| Consumer Staples | 21.0x | 14x – 28x | Earnings stability and predictable cash flows justify a resilience premium; private-label contract manufacturers sit near the floor. |
| Industrials | 20.0x | 13x – 30x | Defense contractors and automation equipment makers trade near 25x; traditional heavy industrials with high D&A sit near the sector median. |
| Aerospace & Defense | 25.0x | 18x – 34x | Long-cycle government contracts and backlog visibility support premium multiples; commercial aerospace is more cyclical. |
| Transportation | 17.0x | 11x – 26x | Asset-heavy trucking and rail operators trade below 15x on high D&A; logistics software platforms command 22x+ on asset-light models. |
| Energy | 13.0x | 7x – 20x | Commodity price volatility compresses multiples; integrated majors trade near 12x while E&P companies show the widest cycle swings. |
| Materials | 17.0x | 10x – 26x | Specialty chemicals and packaging trade above 18x; bulk commodity producers and miners sit at the sector floor. |
| Mining | 14.0x | 8x – 22x | Multiples move inversely to the commodity cycle — low at peak earnings, high when EBIT is depressed. Royalty streamers trade at a significant premium to operators. |
| Real Estate | 22.0x | 14x – 32x | REITs generate stable lease income; industrial and data-center REITs trade near 28x while retail and office REITs sit well below the sector median. |
| Utilities | 19.0x | 13x – 26x | Regulated utilities provide earnings certainty; renewable developers trade above 22x while traditional thermal generators sit at the sector floor. |
| Communication Services | 26.0x | 15x – 40x | Streaming and social media platforms drive the high end; traditional telecom trades below 18x on capital intensity and subscriber saturation. |
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Try the free EV/EBIT calculatorEV/EBIT vs EV/EBITDA: When to Use Each
EV/EBIT and EV/EBITDA both use Enterprise Value as the numerator, but differ in the denominator. EBIT (Earnings Before Interest and Taxes) subtracts depreciation and amortization, while EBITDA adds those charges back. The result is that EV/EBIT is always higher than EV/EBITDA for the same company — and the gap widens the more asset-intensive the business.
Use EV/EBIT when D&A drag matters. For capital-intensive sectors like industrials, transportation, utilities, and mining, EV/EBIT is the more informative signal. A trucking company that depreciates its fleet over 7 years has real economic costs that EV/EBITDA ignores. EV/EBIT keeps those costs in view, making it harder to flatter a business that must spend heavily to stay competitive. For a deeper look at how these multiples interact with the full discounted cash flow framework, the EV/EBITDA guide covers enterprise value mechanics in detail.
Use EV/EBITDA for asset-light businesses. Software and technology companies have minimal D&A relative to revenue — the add-back changes the multiple very little. In those sectors, EV/EBITDA is widely used because it approximates operating cash generation without capex distortions.
Step 1: Identify the right row. Match the company to its GICS sector or industry sub-group. The spread in this table is enormous — Software at 42x vs Energy at 13x — so the right sector benchmark matters far more than any individual multiple reading.
Step 2: Locate the company within the range. If the sector median is 20x and a company trades at 14x, the first question is why. Is it a capital-allocation problem? Cyclically elevated EBIT? A structural competitive disadvantage? Or genuine undervaluation? The range column gives the typical spread — companies below the floor warrant deep investigation.
Step 3: Compare over time. A company's current multiple relative to its own 5-year range is as informative as peer comparison. A utility at 20x may look above median today, but if it has historically traded at 17–22x with a 19x midpoint, the current multiple is within its normal band. Use both dimensions — cross-section and time series — before drawing a valuation conclusion.
What Drives Each Sector's EV/EBIT Multiple
Software (42x median)
SaaS businesses have minimal D&A, so EV/EBIT tracks closely to EV/EBITDA. Recurring subscription revenue, 70%+ gross margins, and near-zero incremental delivery costs allow EBIT to grow faster than revenue as the business scales. The market pays for forward EBIT, not trailing — growth disappointments compress these multiples sharply.
Communication Services (26x median)
Streaming and social platforms at the high end benefit from network effects and advertising leverage. Traditional telecom sits near 18x on the D&A drag from network infrastructure — fiber and wireless capex translates into substantial depreciation that keeps EBIT well below EBITDA.
Real Estate (22x median)
REITs generate stable lease income; the gap between EV/EBIT and EV/EBITDA reflects real estate depreciation — a non-cash charge that does not represent true economic cost for appreciating assets. Industrial and data-center REITs trade near the top of the range on secular demand tailwinds.
Consumer Staples (21x median)
Defensive cash flows and global brand moats justify a resilience premium. The EV/EBIT multiple is higher than EV/EBITDA by a modest margin here because consumer packaged goods companies depreciate manufacturing plants, but the absolute D&A drag is manageable relative to operating income.
Industrials (20x median)
Defense and automation trade above median on backlog visibility. The gap between EV/EBIT and EV/EBITDA in this sector is meaningful — heavy machinery manufacturers depreciate expensive equipment, making the D&A add-back material and EV/EBIT a more conservative signal.
Energy (13x median)
Commodity price uncertainty and high capital reinvestment keep EV/EBIT structurally elevated relative to EV/EBITDA — oil and gas assets are depreciated aggressively, so EBIT is substantially lower than EBITDA. The market applies a cycle-skepticism discount even at peak earnings.
Common EV/EBIT Mistakes to Avoid
Mistake: Cross-sector comparison
Comparing a software company at 42x to an energy company at 13x and calling the energy company cheap is meaningless. The multiples reflect fundamentally different business models, growth rates, and capital requirements. Always compare within the same sector or industry sub-group.
Mistake: Using EV/EBIT for banks
Interest expense is the largest operating cost for a bank — it is the cost of funding the loan portfolio. EBIT adds interest back, stripping the denominator of its most important line item. The resulting multiple is structurally meaningless. Use Price/Book or Price/Earnings for financial intermediaries.
Mistake: Ignoring the EBIT vs EBITDA gap
A mining company that depreciates $500M of equipment per year shows a vastly different EV/EBIT versus EV/EBITDA. Using EV/EBITDA for heavy-asset businesses understates the real multiple and overstates value. Know which metric the market convention uses in each sector before benchmarking.
Mistake: Peak-cycle EBIT
Cyclical companies show their lowest EV/EBIT at peak earnings — right before the cycle turns. An energy company at 10x when oil is $120/barrel looks cheap; the same company at 10x when oil returns to $70 has a 40%+ EBIT cut embedded. Always benchmark against mid-cycle EBIT, not trailing peak earnings.
Common questions
EV/EBIT — answered directly.
What is a good EV/EBIT ratio?
There is no universal answer — it depends entirely on the industry. Tech and Software trade between 30x and 45x while Energy and Banking sit between 10x and 15x. A low multiple in a capital-intensive sector can reflect high D&A drag, not cheap valuation. Always compare a company to its sector median, not the market average, and ask why the multiple diverges: is it a genuine competitive advantage or a temporary earnings distortion?
How does EV/EBIT differ from EV/EBITDA?
EBIT subtracts depreciation and amortization, making EV/EBIT always higher than EV/EBITDA for the same company. EV/EBIT is more conservative and better for comparing businesses with different capex intensity — a company spending heavily on PP&E will show a higher EV/EBIT multiple, making the D&A drag visible. EV/EBITDA strips that out, which can flatter asset-heavy businesses. For capital-intensive sectors like industrials, transportation, or mining, EV/EBIT is the more honest signal.
Why is EV/EBIT not useful for banks and financial companies?
Interest expense is a core operating cost for banks, not a financing cost. EBIT adds interest back, which removes the largest expense from the denominator and makes the multiple meaningless. Enterprise Value also becomes circular for banks because their debt (deposits, borrowings) is core to the business model. Use Price/Book (liquidation value of loans) or Price/Earnings (captures net interest margin) for financial intermediaries.
What drives high EV/EBIT multiples in technology and software?
Three factors: (1) asset-light models generate EBIT that scales without proportional capex, so D&A subtraction barely dents margins; (2) recurring subscription revenue reduces earnings volatility and justifies a lower discount rate; (3) high incremental margins mean each additional dollar of revenue adds more to EBIT than in capital-intensive sectors. The market pays a premium for that growth quality, which is why Software at 42x looks expensive on an absolute basis but rational on a forward-EBIT basis if growth materializes.
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