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I just came across this unusual usage of the word "multiple" in two separate articles about Daimler's name change and it got me wondering if it has some industry-specific meaning.

Example 1 (source):

“If we can boost cash flow and our multiple, there’s a lot of potential in the Mercedes-Benz stock.”

Example 2 (source):

“But Lucid and Tesla get to start at 100-per-cent EV. For Mercedes you have to convert your existing ICE (internal combustion engine) business to EVs. That may be a limitation on how far the multiple could go near-term.”

At first I thought it was just some random choice of wording meant to sound more meaningful than it really is. But after seeing it a second time, I'm starting to wonder if there's more to it.

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    Cambridge has a stock-market definition. What did you look up?
    – Andrew Leach ♦
    Commented Mar 17, 2022 at 10:27
  • @AndrewLeach That seems to fit, yes. Thank you. That definition was not in the dictionary I searched in.
    – Mentalist
    Commented Mar 17, 2022 at 11:27
  • That's why it's important to search more than one and put that research (and why it didn't help) in the question. An answer will be added in due course, I expect, so the question doesn't languish. Do check back.
    – Andrew Leach ♦
    Commented Mar 17, 2022 at 11:30
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    I'm sure another resource will be able to explain in more detail about why the multiple is important and how to interpret it, but it takes into account share issues and buy-backs as well as profits, so it's important for investors in shares.
    – Stuart F
    Commented Mar 17, 2022 at 11:52
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    @fumblefingers I checked M-W, Collins, and google definitions and this sense of the word is not listed in any of them. This is a jargon usage whose meaning is not readily apparent., so I have no issue with the question.
    – Hellion
    Commented Mar 17, 2022 at 20:06

1 Answer 1

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It's not an industry definition, but an investing or stock market definition: multiple is short for "price to earnings multiple" (also commonly referred to as the "P/E ratio").

As Andrew Leach found, Cambridge Dictionaries has a stock-market definition listed:

the current price of one of a company's shares divided by the amount of profit related to it that the company makes in a year.
from dictionary.cambridge.org

Similarly, Accounting Tools has this to say:

The price earnings multiple compares the earnings per share reported by a company to the market price of its common stock. This multiple is used by investors to judge how expensive a share of the company's stock is.
from AccountingTools.com

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