The major benefit of capitalisation multiples (whether it be P/E, EV/EBITDA or EV/EBIT) is providing an indication of relative value.

In isolation, say a zinc miner on a multiple of 4, or an IT services company on a multiple of 30, tells you very little.

But if you have a zinc miner on a multiple of 4 when the majority of other zinc miners are trading at an average of 10 +, then that, prima facie, is evidence of under value.

The more directly comparable companies in the sector/ sub sector, the more valuable such analysis becomes.

I however realise that in NZ where there are so few companies in each sector, meaningful comparable company analysis is difficult.