If a company's EBITDA is expected to rise into the next 12 months, what NTM ratio would indicate this growth?

When assessing a company's growth prospects in relation to its EBITDA, the Net Trailing Multiple (NTM) ratio is crucial. The NTM ratio indicates how much investors are willing to pay for each unit of EBITDA and is often expressed as a multiple. Typically, a lower NTM ratio suggests that the stock might be undervalued or that the company is expected to grow at a slower rate, while a higher NTM ratio indicates strong growth expectations.

In the context of a company whose EBITDA is anticipated to rise in the next 12 months, a low NTM ratio, such as 5x, suggests that the market may not fully recognize the potential growth yet. This could present an opportunity for investors anticipating that as the company's EBITDA increases, the NTM ratio may rise as well, reflecting improved investor confidence and valuation.

Conversely, higher NTM ratios (10x, 15x, or 20x) typically indicate that the company is already being valued at a premium due to expected growth or strong current performance, signaling that the market has already priced in growth to some extent. However, if there’s a belief that EBITDA will rise significantly, initially low NTM ratios can often imply significant upside potential as the market corrects over time