Market Cap / EV

Market capitalization and enterprise value each measure a company's market value. However, the two calculations are not identical, and the terms are certainly not interchangeable. Each offers a peek into a company's overall value and a way to compare similar companies, which in turn, helps in determining whether the price of a company’s shares is fair or overpriced. A low Market Cap / Enterprise Value ratio when viewed in comparison to its peer groups or benchmarks is generally considered better, from an investor’s point of view.

Calculated as: Market Capitalization ÷ Enterprise Value