Microsoft Excel LibreOffice Calc

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, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income (loss) 3,033  2,371  596  (241) 274 
Add: Income tax expense 769  1,425  950  167  161 
Earnings before tax (EBT) 3,802  3,796  1,546  (74) 435 
Add: Interest expense 848  484  459  210  141 
Earnings before interest and tax (EBIT) 4,650  4,280  2,005  136  576 
Add: Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs 11,478  8,116  6,281  4,746  3,253 
Earnings before interest, tax, depreciation and amortization (EBITDA) 16,128  12,396  8,286  4,882  3,829 
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 2015 to 2016 and from 2016 to 2017.

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) 885,540 
Earnings before interest, tax, depreciation and amortization (EBITDA) 16,128 
Ratio
EV/EBITDA 54.91
Benchmarks
EV/EBITDA, Competitors
Costco Wholesale Corp. 18.17
eBay Inc. 10.96
Home Depot Inc. 14.49
Lowe's Cos. Inc. 13.23
Netflix Inc. 21.48
Target Corp. 7.91
TJX Cos. Inc. 14.40
Walmart Inc. 11.45
EV/EBITDA, Sector
General Retailers 19.66
EV/EBITDA, Industry
Consumer Services 14.72

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, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 705,410  389,269  274,123  163,311  159,204 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 16,128  12,396  8,286  4,882  3,829 
Ratio
EV/EBITDA3 43.74 31.40 33.08 33.45 41.58
Benchmarks
EV/EBITDA, Competitors
Costco Wholesale Corp. 12.63 13.27 13.49 12.08 12.30
eBay Inc. 14.50 8.04 8.92 12.34 12.88
Home Depot Inc. 12.90 13.23 12.90 11.11 11.74
Lowe's Cos. Inc. 11.43 12.18 12.79 10.47 9.60
Netflix Inc. 18.03 11.80 10.59 8.22 9.62
Target Corp. 5.59 7.47 9.21 7.85 8.09
TJX Cos. Inc. 11.16 11.83 11.14 10.70 9.10
Walmart Inc. 7.91 7.75 8.40 8.37 8.16
EV/EBITDA, Sector
General Retailers 15.92 12.72 12.34 10.93 10.95
EV/EBITDA, Industry
Consumer Services 13.17 11.89 11.41 11.20 10.78

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 705,410 ÷ 16,128 = 43.74

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 declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.