There are many ways to value a stock. One way is to start by looking at the enterprise value (EV) of the company, or the total value of the business after factoring in the balance sheet. EV is then often compared to its earnings before interest, taxes, depreciation, and amortization ( EBITDA ). Comparing these two numbers gives you the EV-to-EBITDA ratio, and the lower that figure is, the cheaper the stock is.
Video game company Electronic Arts (NASDAQ: EA) trades at a low EV-to-EBITDA ratio. However, in this clip from Motley Fool Backstage Pass , recorded on Sept. 27 , Fool contributor Jose Najarro shares that not only is EA's valuation cheap, but the company is also poised for robust growth in the coming year -- and that's a rare combination.
For further details see:
Why EA Is Looking Like a Good Value Stock