Why EBITDA Is So Misleading For Explorers And Producers These Days

Discussion in 'Trading' started by Zestilio, Oct 28, 2015.

  1. Zestilio

    Zestilio

    EBITDA/EV is a widely used metric in the energy sector to value public companies.

    But debt is now SO HIGH in much of this sector, Interest Expense skews this data.

    The sell side now can use EBITDA to hide how debt-laden their corporate clients really are.

    I'll leave you the article and expect some feedback. Do we need some new metrics for this sector (or maybe for all of them) and is EBITDA still relevant?
     
  2. Sig

    Sig

    If you're investing in a company without looking at their full financials you deserve what's coming to you. Debt and cash flow are in plain sight in every one of these company's quarterly financials with about 30 seconds of scanning, you'd be an idiot to be surprised by it because you were just using EBITDA!