Zacks.com featured highlights POSCO Holdings, Par Pacific Holdings, Sally Beauty, Brookfield and HF Sinclair

Tap These 5 Bargain Stocks with Attractive EV-to-EBITDA Ratios

Investors often focus on the price-to-earnings (P/E) ratio while looking for attractively priced stocks. Easy to compute and widely recognized, it remains one of the most commonly used valuation metrics for estimating a stock’s fair market value. However, despite its widespread use, the P/E ratio comes with certain drawbacks.

Although P/E is the most popular valuation metric, a more complicated multiple called EV-to-EBITDA is often considered a more effective alternative. It provides a clearer picture of a company’s valuation and earnings potential by taking a more comprehensive approach. Although P/E considers a firm’s equity portion, EV-to-EBITDA captures its total value.

POSCO Holdings Inc., Par Pacific Holdings, Inc., Sally Beauty Holdings, Inc. , Brookfield Infrastructure Partners L.P. and HF Sinclair Corp. are some stocks with impressive EV-to-EBITDA ratios.

Is EV-to-EBITDA a Better Substitute for P/E?

Also referred to as the enterprise multiple, EV-to-EBITDA is the enterprise value (EV) of a stock divided by its earnings before interest, taxes, depreciation and amortization (EBITDA). EV is the sum of a company’s market capitalization, its debt and preferred stock minus cash and cash equivalents. In essence, it is the entire value of a company. EBITDA, the other element, gives a clearer picture of a company’s profitability by removing the impact of non-cash expenses like depreciation and amortization that dampen net earnings. It is also often used as a proxy for cash flows.

Typically, the lower the EV-to-EBITDA ratio, the more enticing it is. A low EV-to-EBITDA ratio could indicate that a stock is undervalued. Unlike the P/E ratio, EV-to-EBITDA takes debt on a company’s balance sheet into account. For this reason, it is typically used to value acquisition targets. The ratio shows the amount of debt that the acquirer has to bear. Stocks flaunting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates. 

Another shortcoming of P/E is that it can’t be used to value a loss-making firm. A company’s earnings are also subject to accounting estimates and management manipulation. On the other hand, EV-to-EBITDA is difficult to manipulate and can also be used to value loss-making but EBITDA-positive companies. EV-to-EBITDA is also a useful tool in measuring the value of firms that are highly leveraged and have a high degree of depreciation. Moreover, it can be used to compare companies with different levels of debt.

EV-to-EBITDA is not devoid of limitations and alone cannot conclusively determine a stock’s inherent potential and future performance. The multiple varies across industries and is usually not appropriate when comparing stocks in different industries, given their diverse capital expenditure requirements.

Thus, instead of just relying on EV-to-EBITDA, you can club it with the other major ratios, such as price-to-book (P/B), P/E and price-to-sales (P/S) to achieve the desired results.

Here are our five picks out of the 13 stocks that passed the screen:

POSCO manufactures and markets a wide range of steel products, including hot-rolled sheets, plates, wire rods, cold-rolled sheets, galvanized sheets and stainless steel globally. This Zacks Rank #2 stock has a Value Score of A. 

POSCO has an expected year-over-year earnings growth rate of 222.4% for 2026. The Zacks Consensus Estimate for PKX’s 2026 earnings has been revised 1.1% higher over the last 60 days.

Par Pacific Holdings is a growth-oriented energy company supplying conventional and renewable fuels across the western United States. This Zacks Rank #2 company has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific Holdings has an expected year-over-year earnings growth rate of 146% for 2026. The consensus estimate for PARR’s 2026 earnings has moved up 20.7% over the past 60 days.

Sally Beauty is an international specialty retailer and distributor of professional beauty supplies. This Zacks Rank #2 stock has a Value Score of A.  

Sally Beauty has an expected year-over-year earnings growth rate of 8.4% for fiscal 2026. The consensus estimate for SBH’s fiscal 2026 earnings has been stable over the past 60 days.

Brookfield Infrastructure Partners owns and operates high-quality, long-life assets in the utilities, transport, midstream and data businesses in North and South America, Asia Pacific and Europe. This Zacks Rank #2 stock has a Value Score of A.

Brookfield Infrastructure has an expected year-over-year earnings growth rate of 9.3% for 2026. The consensus estimate for BIP’s 2026 earnings has been revised 1.1% upward over the past 60 days.

HF Sinclair is an independent energy company producing and marketing gasoline, diesel, jet fuel, renewable diesel, lubricants and specialty products. This Zacks Rank #2 stock has a Value Score of A.  

HF Sinclair has an expected year-over-year earnings growth rate of 134.2% for 2026. The Zacks Consensus Estimate for DINO’s 2026 earnings has moved up 33.9% over the past 60 days.

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