Jake's View | Confused by questions written in ‘investmentanalish’? Then my best advice is do nothing
Let’s forget these ‘before this, that and the next...’ measures of a company’s performance, and stick to earnings as classically stated in the profit and loss
Blended forward 12-month pricing of [Sinopec’s] enterprise value relative to Ebitda is the lowest of any major integrated oil and gas business after Gazprom, Rosneft and Eni, according to data compiled by Bloomberg.
- by Bloomberg, SCMP Business, August 31
Oh, what a widespread language “investmentanalish” has become. It is no longer confined to smart stockbroker presentations that no one understands.
No, now it is spoken fluently even by deskbound word preparation technicians in the depths of the Bloomberg number production factories.
I spent 20 years in the investment analyst business and I shall now parse this jargon for you: The easy and obvious way to calculate a company’s total value is to multiply the number of shares in issue by the latest share price. The resulting figure is called market capitalisation.
Enterprise value is a fancy equivalent of market capitalisation. It assumes that the share price on the stock market is usually too low and the real value of a company is what some other company might be willing to pay in a takeover bid.