As we were preparing to leave for my daughters softball tournament on Saturday, HIT Capital’s investment software finished its latest ranking of 66,216 publicly traded companies. ALCIS (Catering International & Services) came back in the top ten at a 2x EV/EBITDA, one of the best opportunities I’d ever identified. So, rather than waiting until Monday, I grabbed my tablet and spent the drive, and every break between games, diving deeper into ALCIS.

For context, the S&P 500 trades around 16.1x today. A 2x EV/EBITDA is about as cheap as the screener ever surfaces, and usually it’s a mirage powered by bad or stale data. This time the data looked clean and the 2x looked real, so my excitement kept building.

But as the temperature heated up between my daughter’s softball games, my excitement started to cool. What I hadn’t caught before was that the EBITDA wasn’t flowing to the bottom line the way I’d expect. I’ve made this mistake before, losing money in the process, which is why I want to share this with you while it’s fresh.

This matters even if you never buy a single stock. EBITDA, minority interest, tax, and the bottom line are numbers that help tell us whether profit is real, whether it’s a business we own, the one we work for, or one we’re investing in. The gap between “looks profitable” and “is profitable” is where our money can quietly disappear.

What Is a Value Trap?

A value trap is a stock that looks cheap but isn’t. The thought pattern that gets us is always some version of:

“This trades at 2x EV/EBITDA. Competitors trade at 6x. I’m getting a 67% discount.”

That feels airtight and our bias for action kicks in, but it isn’t. It’s the start of a question, not the answer.

Two Red Flags Behind ALCIS’s 2x Multiple

Two structural issues explained almost the whole discount, and neither was going away. They’re also the two that quietly distort plenty of private businesses.

Red Flag #1: Minority Interest, or Who Actually Owns the Profit

EV/EBITDA compares Enterprise Value (market cap plus debt, minority interest, and preferred stock, minus cash) to Earnings Before Interest, Taxes, Depreciation, and Amortization. The catch with ALCIS: a chunk of those earnings belongs to other people.

2025 (€M)	Amount
Consolidated net income	10.2
Net income attributable to Group shareholders	9.1
Implied non-controlling interest share	1.1

Roughly 11% of the profit isn’t ours. It belongs to minority partners in the subsidiaries. But EV/EBITDA uses the full consolidated EBITDA, as if we owned 100% of it, which we don’t. Under IFRS 10, the company fully consolidates subsidiaries it merely controls, including CIS Yemen (50%), Support Services Mongolia (49%), and CSS Congo (49%), pulling in 100% of their EBITDA while owning half or less.

There’s a standard way to adjust for this. Because EBITDA is fully consolidated, the textbook fix is to add minority interest into Enterprise Value, so the top and bottom of the ratio cover the same business. In my case, it wasn’t. The EV behind that 2x left minority interest out. So, the denominator counted 100% of the EBITDA while the numerator quietly ignored the slice that belongs to someone else, making the multiple look cheaper than it really was.

If you own a business with a partner, a joint venture, or a part-owned subsidiary, this is your number too. The EBITDA on the consolidated statement isn’t the EBITDA you get to keep. Control is not the same as ownership.

Stacker rule: Always account for minority interest and preferred shares. Owning control isn’t the same as owning the profit.

Red Flag #2: A Sustained ~50% Tax Rate

The tax line was the bigger problem. ALCIS is French-listed, so the lazy assumption is that it pays France’s 25% corporate rate, but the reality is nowhere close. In 2025, €26.3M of operating profit, less €5.8M of net financial expense (leases, FX, and debt costing more than the cash earns), gave about €20.5M of pre-tax income. Actual tax came to €10.3M, a ~50% effective rate, leaving just €10.2M of net income.

2025 Tax Bridge	€M
Pre-tax income	20.5
Tax at French 25% rate	~5.1
Actual tax expense	10.3
Excess over French rate	~5.2

The reason is geography. ALCIS earns essentially all its revenue outside France, in places like Africa, Kazakhstan, Mongolia, Brazil, and Algeria, where rates are higher and losses in one country can’t offset profits in another. It isn’t a one-off, either; 2024 ran about 53.6%. And its peers don’t share the problem:

Company	Period	Effective Tax Rate
ALCIS	FY2025	50.24%
Sodexo SA	FY2025	22.20%
Compass Group	FY2024/25	~24.00%
Elior Group	FY2024	32.80%

This is what matters, whether you’re looking at a stock or your own business. EBITDA is a pre-tax number. Two companies with an identical EV/EBITDA can deliver completely different after-tax cash. ALCIS keeps about half its pre-tax profit; Sodexo and Compass keep three-quarters. If you run a company, you already feel this: you don’t live on EBITDA, you live on what’s left after the tax bill. A higher multiple on a lower-taxed business can be the cheaper one.

Stacker rule: EBITDA ignores taxes for a reason, but lean on it for a quick comparison and it misses the boat.

The Adjusted Scorecard

Factor	Headline View	Adjusted Reality
EV/EBITDA	~2x (deep discount)	Higher once minority interest is stripped out
After-Tax Cash	Invisible at the EBITDA line	Compressed by a ~50% tax rate
Capital Intensity	A potential concern	In line with or better than peers
Financial Expense	Possible debt drag	Net cash position; interest isn’t eating profit
Verdict	“67% discount to peers”	“Close to fairly valued”

Four Questions: From EBITDA to the Bottom Line

Whether you’re analyzing a stock, your own company, or the business you work for, run the headline profit through this filter:

1. Who owns the earnings? Minority partners, joint ventures, and part-owned subsidiaries all dilute your real claim on earnings.
2. What’s left after tax? Compare the effective rate to peers. Same EBITDA, potentially very different take-home cash.
3. What does it cost to keep running? Compare depreciation to actual capital spending. If real capex runs ahead of D&A, the cash picture is worse than EBITDA suggests.
4. How much interest expense? If the company has debt, what is the interest expense and cost of capital? If the business is burdened by interest, the operating profit may be going to the bank rather than you.

Pass all four and the profit is probably real. Fail one and you need to know why.

For the record, ALCIS passed the third and fourth tests: its capital intensity and financial expenses were in line or better than their peers. I’m not hunting for reasons to say no, just the problems that are really there. ALCIS had two, and two was enough to adjust my decision.

The Bottom Line

I passed on ALCIS. Not because cheap stocks are bad, but because this one wasn’t actually cheap: minority interests and a ~50% tax rate ate the discount the screener was so excited about. The growth and solid balance sheet were not enough to make it into our portfolio after the valuation came out in-line with its peers.

A headline number, whether a multiple, an EBITDA figure, or a “record profit,” is not the answer. It’s a question. That’s as true for the business you own or run as it is for my stock picking.

Working through your own numbers and want a second set of eyes? Reply or drop it in the comments. I’ve made these mistakes so we can catch them together. That’s what the Stackers Club and Financial Wellness Program is for.

Want to go deeper on the numbers that drive your finances and your business? Explore the Knowledge Stack or join the Stackers Club.