Deciphering Twitter’s comprehensive valuation
Twitter (TWTR) has an enterprise value (or EV) of $13.8 billion. In comparison, its Internet peers eBay (EBAY), Baidu (BIDU), Yelp (YELP), and Square (SQ) posted respective enterprise values of $41.5 billion, $79.9 billion, $3.3 billion, and $18.2 billion, respectively.
Twitter’s EV-to-adjusted EBITDA[1. enterprise value to adjusted earnings before interest, tax, depreciation, and amortization] multiple for the trailing 12 months is 45.8x. The company’s EV-to-estimated-EBITDA multiple is 17.4x. The expectation for Twitter’s EBITDA margin for 2017 is 12.0%.
Twitter’s EV-to-sales multiple for the trailing 12 months is 5.7x, while its expected EV-to-sales multiple for 2018 is 5.4x.
Twitter’s trailing-12-month EV-to-cash-flow multiple is 16.6x, and its trailing-12-month EV-to-free-cash-flow multiple is 20.7x.
Inside Twitter’s price metrics
With a book value per share of $6.60, Twitter is trading at a price-to-book value of 3.4x. Its estimated book value per share for 2018 is $6.70.
Twitter’s price-to-sales ratio is 6.7x while its estimated price-to-sales ratio is 6.8x for 2018.
Twitter’s EBITDA of $300.5 million for 2017 fell 5.0%. Its stock is trading at a price-to-EBITDA ratio of 54.1x.
Earnings and sales
Twitter reported EPS (earnings per share) of -$0.70 in 2017, while its EPS for 2018 is forecast to be $0.40.
Twitter’s EPS for 2017 came on total sales of $2.4 billion, which fell 7%. Its sales for 2018 are expected to expand to $2.5 billion.
EBIT-to-interest coverage ratio
Twitter’s EBIT-to-interest ratio, also called the interest coverage ratio, is ~-4.8x. Twitter has a debt-to-enterprise value of 13.0%.