One firm has a 40% EBITDA margin at 8x EBITDA; another a 10% margin at 16x. What's the problem with comparing these directly?

• The 8x firm is definitely overvalued
• The margins differ so much that the multiples aren't comparable; the high-margin firm at 8x may be cheaper than the low-margin firm at 16x
• Margins have no bearing on the multiple
• They cannot both be EBITDA multiples
• Nothing; the higher multiple is always the better company