Gross profit to enterprise value (GP/EV)
Gross profit as a percentage of the value of the whole company including its debt.
Gross profit is the cleanest measure of what a business actually sells. Novy-Marx divided it by total assets, not by enterprise value as here, and found that version predicts returns about as well as book to market.
How it is computed here
Gross profit / (market capitalisation + total debt - cash) x 100
Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business. Filed under value. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Where the cost of revenue line is not reported, gross profit is missing and this is withheld.
- Companies that classify costs differently above and below the gross-profit line are not comparable here.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is gross profit to enterprise value calculated?
Gross profit / (market capitalisation + total debt - cash) x 100. Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business.
What does gross profit to enterprise value tell a value investor?
Gross profit is the cleanest measure of what a business actually sells. Novy-Marx divided it by total assets, not by enterprise value as here, and found that version predicts returns about as well as book to market.
When does gross profit to enterprise value mislead?
Where the cost of revenue line is not reported, gross profit is missing and this is withheld. Companies that classify costs differently above and below the gross-profit line are not comparable here.