EV / EBITDA is generally a better metric than P/E because EBITDA is a proxy for operating cash flow. EBITDA is also:
- Before interest, therefore capital structure neutral
- Before taxes, therefore tax jurisdiction neutral
- Before depreciation and amortization (D&A), therefore accounting policy neutral
On the other hand, P/E is driven by earnings. Earnings is an accounting number and can be influenced in many ways outside of the core business, such as through taxes, interest, and depreciation and amortization (D&A).