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The ratio enjoys greater popularity among valuation metrics in the investment toolkit and is preferred while uncovering stocks trading at a bargain. But even this straightforward, easy-to-calculate equity valuation multiple is not devoid of limitations. EV/EBITDA is a Better Approach, Here’s Why. While P/E is by far the most-popular valuation metric, a more-complicated metric called EV/EBITDA does a better job in working out the fair market value of a firm. A low EV/EBITDA ratio could signal that a stock is potentially undervalued. However, EV/EBITDA takes into account the debt on a company’s balance sheet that P/E ratio does not. Hence, a strategy entirely based on EV/EBITDA might not fetch the desired results. But you can combine it with other major ratios such as price-to-book (P/B), P/E and price-to-sales (P/S) to screen value stocks. For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/359665/tap-5-value-stocks-with-strikingly-low-evebitda-ratios.