Practical Applications of And the Winner Is … A Comparison of Valuation Measures for Equity Country Allocation

Practical Applications Summary

In And the Winner Is … A Comparison of Valuation Measures for Equity Country Allocation, from the July 2019 edition of The Journal of Portfolio Management, Adam Zaremba of the University of Dubai and Jan Szczygielski of the Newcastle Business School at Northumbria University examine the performance of 14 valuation ratios to see which are best for country-level equity allocation. They assess seven performance metrics and calculate ratios of each against both enterprise value (EV) and market equity (ME).

For individual stocks, the ratio of earnings before interest, tax, depreciation, and amortization (EBITDA) to EV is consistently