EBITDA = Earnings Before Interest, Taxes, Depreciation & Amortization. Formula: EBITDA = Revenue − Operating Costs (excl. D&A, interest, taxes). EV/EBITDA <5x = cheap; 5–8x = fair; >10x = expensive. In shipping: EBITDA margins of 60–75% at peak rates. In mining: depends on metal prices and AISC. Adjusted EBITDA strips one-time charges (restructuring, write-downs) for cleaner comparison.
MB Capital Strategies Glossary — Updated June 2026
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. It strips out the effects of financing decisions (interest), tax jurisdictions (taxes), and accounting choices around asset age (D&A) to give a cleaner picture of a company's operating profitability. For hard-asset investors in shipping, mining and energy, EBITDA is one of the most widely used valuation and credit metrics.
The second formula is simpler in practice: take the operating profit line from the income statement and add back D&A from the notes or the cash flow statement. That operating profit line, expressed as a percentage of revenue, is the operating margin — and for capital-intensive shipping and mining it is the more honest profitability gauge because, unlike EBITDA, it does not pretend depreciation is free.
| Metric | Includes | Best Use |
|---|---|---|
| EBITDA | Operating profit + D&A added back | Cross-company comparison regardless of capital structure or asset age |
| EBIT | Operating profit (after D&A) | When asset depreciation matters for analysis |
| Net Income | After interest and taxes | Dividend coverage, EPS calculation |
The key point: EBITDA makes it easier to compare a highly-leveraged tanker company against a debt-free one, because it removes the interest cost difference. This is useful for understanding operational performance — but it can also mask dangerous leverage levels.
The most common EBITDA-based valuation metric is the EV/EBITDA multiple:
A low EV/EBITDA multiple relative to peers signals potential undervaluation. Typical ranges by sector:
In shipping, EBITDA is particularly useful because depreciation charges can vary enormously depending on when a fleet was acquired and at what cost. A company that bought ships at distressed prices in 2020 will have lower depreciation than one that ordered new vessels at 2022 peak prices — but both may generate similar operational cash flows. EBITDA strips out this accounting difference and focuses on what the vessels are actually earning. For tanker stocks like TORM and CMB.Tech, EV/EBITDA is used alongside TCE rate analysis to gauge cycle positioning.
Mining companies disclose EBITDA margins alongside AISC (All-In Sustaining Cost) data. A gold miner with a 50% EBITDA margin at $2,000/oz gold is generating real cash — but that margin collapses quickly if gold drops to $1,600/oz. When analysing miners, EBITDA at different commodity price assumptions (the sensitivity table) is more revealing than the current EBITDA number. BHP's Q1 2026 EBITDA margin was reported at approximately 47% — strong for a diversified miner, but heavily dependent on iron ore prices.
EBITDA is a useful proxy but has serious limitations investors should keep in mind:
1. EBITDA ignores CAPEX. Adding back depreciation makes it seem like capital spending does not exist. For capital-intensive businesses like shipping and mining, the real cash burn from fleet renewal or mine development is not visible in EBITDA. This is why Free Cash Flow is the superior dividend metric.
2. EBITDA ignores working capital. A company can have strong EBITDA but negative operating cash flow if receivables are ballooning. Always check the cash flow statement.
3. "Adjusted EBITDA" can be manipulated. Companies often add back "non-recurring" charges to produce an inflated adjusted EBITDA. Track the difference between reported and adjusted EBITDA over time — if adjustments keep growing, that is a red flag.
Marco Bozem
Investor & Analyst | Hard Assets, Dividends, Shipping | MB Capital Strategies
Marco analyses hard-asset and dividend stocks with focus on shipping, mining and energy. All content is based on publicly available data and personal analysis. Not investment advice.
Concrete examples from the hard-asset universe illustrate how EBITDA translates to dividend capacity:
In most sectors, EBITDA is a reasonable proxy for operating cash generation. In shipping, it's less reliable because depreciation charges for vessels are very large (a $100M vessel depreciated over 20 years = $5M annual D&A, which is real value loss as the vessel ages) and because drydock CapEx is lumpy and not captured in EBITDA.
Instead, shipping analysts prefer these metrics:
For a tanker analyst, spending time on EBITDA multiples (EV/EBITDA) is less valuable than calculating the TCE-implied dividend capacity. This is why shipping investors who come from industrial backgrounds often misjudge tanker valuations — the metrics are different. Use the Shipping Cashflow Calculator for direct TCE-to-dividend modeling. Cash Flow Margin explained →
Different hard-asset sectors use EBITDA differently. Here is how to apply the metric correctly across the portfolio:
| Sector | EBITDA Usefulness | Preferred Metric | EV/EBITDA Typical Range |
|---|---|---|---|
| Pipeline/Midstream | High — predictable contracted revenue | EBITDA × DCF coverage ratio | 10–14× |
| Gold Mining | Medium — D&A high, use alongside AISC | AISC margin + P/NAV | 6–12× |
| Coal/Iron Ore Mining | Medium — very cyclical EBITDA | Cycle-average EBITDA + FCF yield | 3–6× at cycle peak |
| Crude/Product Tanker | Lower — vessel depreciation distorts | TCE yield + distributable cash | 3–8× (cycle-dependent) |
| LNG Tanker (TC) | High — contracted revenue like pipeline | EBITDA + DCF ratio | 8–12× on contracted basis |
| REIT/BDC | Not standard — use FFO/NAV | FFO per share, NAV/share | Not applicable |
The key insight: EBITDA is most reliable when revenue is contracted (midstream, long-term charter shipping) and least reliable when revenue is highly volatile (spot shipping, commodity mining). Always pair EBITDA analysis with a free cash flow check — companies can show high EBITDA but consume cash through capex cycles. A useful cross-check here is free cash flow yield, which measures how much of that EBITDA actually converts into distributable cash relative to market value. For dividend sustainability, the question is always: "How much of this EBITDA becomes distributable free cash flow?"
Marco Bozem
Investor & Analyst | Hard Assets, Mining, Shipping | MB Capital Strategies
Marco analyses commodity and hard-asset companies with a focus on cash generation, dividend sustainability and cycle positioning. All analysis based on public company reports. Not investment advice.
Related: Best High-Yield Dividend Stocks 2026
Investor & Analyst | Hard Assets, Dividends, Shipping | MB Capital Strategies
Marco has analyzed commodity and dividend stocks for years with focus on shipping, mining and energy. Not financial advice.
