premium multiple

USAGE SUMMARY

"premium multiple" is an accepted term in written English.
It is typically used in reference to stock valuation, meaning the ratio of the company's stock price to its earnings per share. For example, a company with a stock price of $80 and earnings per share of $20 would have a premium multiple of 4.

✓ Grammatically correct

News & Media

Formal & Business

Human-verified examples from authoritative sources

Exact Expressions

11 human-written examples

Its lead underwriter, J.P. Morgan, delivered an "overweight" rating, assuring investors that "longevity and low-risk growth should sustain premium multiple".

The New York Times

While the tenanted pubco model and Enterprises' high debt levels mean a premium multiple is unlikely, the company is becoming more investable, and even small like for like inflections can have a big impact on its equity value.

The Guardian - Business

(Its shares are now $250).So this approach assumes phenomenal sales growth and higher margins than its competitors, and then requires the company to trade on a premium multiple on the basis of fast growth in the 2020s.

The Economist

Nobody wants to pay a premium multiple of earnings in an uncertain market setting.

Forbes

First, shun all the high-priced stocks that sell at a premium multiple to the Standard & Poor's 500 stock average.

Forbes

We're willing to pay a premium multiple if we think the company is going to deliver premium performance.

Forbes

Human-verified similar examples from authoritative sources

Similar Expressions

49 human-written examples

By being lean you maximise chances to obtain premium multiples for yourself and entrepreneurs, at any exit valuation.

TechCrunch

It's deserving of its premium multiples, and I'll be watching closely over the next 12 months.

TechCrunch

As long as interest rates rise at the "measured" pace promised by Alan Greenspan, investors should soon begin paying premium multiples for growth again.

Forbes

But in a November report, Vilensky defends the prices, saying the gaming industry "deserves to command premium multiples, given the visibility surrounding the new hardware cycle that will drive sales and earnings growth".

Forbes

With marketplaces like Uber and Amazon (which features a significant marketplace business) likely exhibiting customer expansion over time, the combination of SaaS-like upsell and a massive addressable market may earn premium multiples for a new breed of marketplaces.

TechCrunch

Expert writing Tips

Best practice

When discussing financial valuations, specify the basis of the "premium multiple". For example, clarify whether it refers to price-to-earnings, revenue, or other metrics for better clarity.

Common error

Avoid using "premium multiple" loosely to simply mean a company is overvalued. It specifically refers to the ratio of a company's market value to a financial metric. Incorrect usage dilutes its meaning and confuses financial analyses.

Linguistic Context

The phrase "premium multiple" functions as a noun phrase that describes a specific type of financial valuation. Ludwig AI confirms its usage in financial contexts.

Expression frequency: Uncommon

Frequent in

News & Media

80%

Formal & Business

15%

Science

5%

Less common in

Wiki

0%

Encyclopedias

0%

Reference

0%

Ludwig's WRAP-UP

In summary, "premium multiple" is a phrase used in finance to describe a valuation ratio that is higher than average. Ludwig AI confirms that this term is grammatically correct and primarily found in financial and business contexts. When using the term, clarify the specific financial metric to which it refers. Related phrases include "high valuation multiple" and "rich multiple". Ludwig's analysis indicates that while not exceptionally common, the phrase is well-understood in professional and financial discussions.

More alternative expressions

Phrases that express similar concepts, ordered by semantic similarity:

high valuation multiple

Emphasizes that the multiple is high, indicating a potentially overvalued asset.

rich multiple

Suggests that the multiple is generous, implying a high price relative to earnings.

inflated multiple

Highlights the artificial increase or unsustainability of the multiple.

superior multiple

Indicates a multiple that is better than average, often due to strong performance.

generous multiple

Similar to "rich multiple", suggesting a favorable valuation from the investor's perspective.

elevated multiple

Focuses on the increased or raised level of the multiple.

enhanced multiple

Implies an improved or strengthened multiple, potentially due to strategic decisions.

top-tier multiple

Suggests that the multiple is among the highest or best in its class.

premium valuation

Focuses on the overall valuation being at a premium, rather than specifically the multiple.

high earnings multiple

Directly specifies that the high multiple is related to the company's earnings.

FAQs

What does "premium multiple" mean in finance?

In finance, a "premium multiple" refers to a valuation ratio (like price-to-earnings) that is higher than the average or expected multiple for comparable companies or the overall market. It suggests investors are paying a higher price for each unit of earnings, revenue, or other metric.

When is it justified to pay a "premium multiple" for a stock?

Paying a "premium multiple" may be justified if a company has significantly higher growth prospects, stronger competitive advantages, superior management, or lower risk compared to its peers. These factors can warrant a higher valuation from investors.

How do analysts determine if a "premium multiple" is sustainable?

Analysts assess the sustainability of a "premium multiple" by examining the underlying drivers of the company's performance, such as its growth rate, profitability, market share, and competitive position. A sustainable multiple is supported by strong and consistent fundamentals.

What are some alternatives to saying "premium multiple"?

You can use alternatives like "high valuation multiple", "rich multiple", or "inflated multiple", depending on the context and the specific nuance you want to convey.