Microsoft Excel LibreOffice Calc

Amazon.com Inc. (AMZN)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Amazon.com Inc., EBITDA calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income (loss) 10,073  3,033  2,371  596  (241)
Add: Income tax expense 1,197  769  1,425  950  167 
Earnings before tax (EBT) 11,270  3,802  3,796  1,546  (74)
Add: Interest expense 1,417  848  484  459  210 
Earnings before interest and tax (EBIT) 12,687  4,650  4,280  2,005  136 
Add: Depreciation of property and equipment and other amortization, including capitalized content costs 15,341  11,478  8,116  6,281  4,746 
Earnings before interest, tax, depreciation and amortization (EBITDA) 28,028  16,128  12,396  8,286  4,882 

Based on: 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29), 10-K (filing date: 2015-01-30).

Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Amazon.com Inc.’s EBITDA increased from 2016 to 2017 and from 2017 to 2018.

Enterprise Value to EBITDA Ratio, Current

Amazon.com Inc., current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 932,771 
Earnings before interest, tax, depreciation and amortization (EBITDA) 28,028 
Ratio
EV/EBITDA 33.28
Benchmarks
EV/EBITDA, Competitors
Costco Wholesale Corp. 19.34
eBay Inc. 10.25
Home Depot Inc. 14.23
Lowe’s Cos. Inc. 16.37
Netflix Inc. 17.64
Target Corp. 8.11
TJX Cos. Inc. 12.56
Walmart Inc. 15.26
EV/EBITDA, Sector
General Retailers 18.64
EV/EBITDA, Industry
Consumer Services 15.59

Based on: 10-K (filing date: 2019-02-01).

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.

Enterprise Value to EBITDA Ratio, Historical

Amazon.com Inc., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 806,848  705,410  389,269  274,123  163,311 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 28,028  16,128  12,396  8,286  4,882 
Ratio
EV/EBITDA3 28.79 43.74 31.40 33.08 33.45
Benchmarks
EV/EBITDA, Competitors
Costco Wholesale Corp. 15.77 12.63 13.27 13.49 12.08
eBay Inc. 9.49 14.50 8.04 8.92 12.34
Home Depot Inc. 13.46 12.90 13.23 12.90 11.11
Lowe’s Cos. Inc. 11.24 11.43 12.18 12.79 10.47
Netflix Inc. 16.14 18.03 11.80 10.59 8.22
Target Corp. 6.96 5.59 7.47 9.21 7.85
TJX Cos. Inc. 11.11 11.16 11.83 11.14 10.70
Walmart Inc. 10.91 7.91 7.75 8.40 8.37
EV/EBITDA, Sector
General Retailers 16.26 15.92 12.72 12.34 10.93
EV/EBITDA, Industry
Consumer Services 13.80 13.26 11.92 11.76 11.13

Based on: 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29), 10-K (filing date: 2015-01-30).

1 See Details »

2 See Details »

2018 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 806,848 ÷ 28,028 = 28.79

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Amazon.com Inc.’s EV/EBITDA ratio increased from 2016 to 2017 but then declined significantly from 2017 to 2018.