Five Hidden Gems: Value Stocks That Stand Out With Compelling EBITDA-to-Enterprise-Value Metrics

When hunting for undervalued stocks, most investors lean on the P/E ratio—it’s simple, familiar, and widely available. But here’s the catch: this popular metric tells only half the story. It ignores debt levels and can’t even evaluate unprofitable companies. That’s where EV-to-EBITDA comes in as a more comprehensive alternative.

Why Smart Investors Are Switching to EBITDA-Based Valuations

The EV-to-EBITDA ratio operates differently than P/E. It divides enterprise value (market cap plus debt minus cash) by earnings before interest, taxes, depreciation and amortization. This approach captures what P/E misses: the real earning power of a business independent of capital structure and accounting treatments.

The key advantages are compelling:

A lower EBITDA-to-enterprise-value multiple signals potential undervaluation—exactly what value hunters seek. Because this metric accounts for leverage, it’s particularly useful for comparing heavily indebted companies or assessing acquisition targets. Unlike P/E, the EBITDA approach works on loss-making firms that still generate operating cash. It’s also much harder to manipulate through accounting gimmicks.

That said, this metric varies dramatically across industries—tech typically trades at premiums while industrials sit lower. The takeaway: use EBITDA ratios alongside P/E, price-to-book, and price-to-sales for a 360-degree view.

The Screening Formula That Identified Five Standouts

Our selection criteria combined multiple filters: EV-to-EBITDA below industry median, forward P/E discount, price-to-book under peer average, price-to-sales efficiency, earnings growth above sector benchmarks, adequate trading volume (50K+ shares daily), minimum price of $5, plus Zacks Rank #1 or #2 combined with Value Score A or B.

Out of 16 candidates meeting all parameters, five stocks emerged as particularly attractive:

Plains GP Holdings (PAGP) transports and markets crude oil and refined products. This Zacks Rank #1 company with an A Value Score projects 27% year-over-year earnings growth for 2026. The EBITDA-based valuation suggests meaningful upside, with consensus estimates revised up 19.7% in the past 60 days.

DNOW Inc. operates a global distribution network for energy and industrial solutions. Ranked #1 with Value Score A, this distributor expects 18.5% earnings growth in 2026. Analyst revisions moved consensus estimates 2.1% higher over two months—a subtle but steady endorsement.

Gibraltar Industries (ROCK) manufactures industrial and building products. This Rank #2 stock carries an A rating on value metrics, with anticipated 11% earnings growth for 2026. The consensus moved up 1.5% recently, reflecting modest but positive sentiment.

Miller Industries (MLR) specializes in towing and recovery equipment manufacturing. Its dramatic 139.5% projected earnings growth for 2026 stands out—a result of easier comparables rather than unrealistic projections. The Rank #2, Value Score A company saw consensus estimates jump 19.7% upward in 60 days, signaling conviction among analysts.

Sally Beauty Holdings (SBH) distributes professional beauty supplies internationally. This Rank #2, Value Score A retailer forecasts 8.4% earnings growth for fiscal 2026. Consensus adjusted 2.5% upward recently, showing consistent analyst support.

Why This Matters Now

The five stocks share a critical trait: attractive EBITDA-based valuations combined with measurable earnings momentum. When enterprise value sits low relative to operating earnings capacity, and when analysts keep revising estimates upward, the margin of safety tilts favorably toward investors.

This disciplined approach to identifying undervalued opportunities has historically outperformed the broader market by significant margins. The combination of rigorous metrics—particularly the EBITDA framework—with fundamental momentum indicators provides a systematic way to filter noise and identify genuine opportunities in today’s complex market.