§ Valuation ratios
Multiple expansion
Glossary version 2026-07-12.v1 · reviewed July 12, 2026
An increase in the valuation multiple investors pay for the same unit of earnings, sales, or cash flow. It can lift the share price even without an equivalent improvement in fundamentals.
Multiple expansion occurs when the market assigns a higher P/E, EV/EBITDA, or other valuation ratio to a business. It may reflect lower interest rates, improving quality, faster expected growth, or greater confidence, but it can also be temporary sentiment. A defensible forecast should not rely on expansion without explaining the business or market change that supports it.