Amazon.com Inc. (AMZN)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
EV to EBITDA Ratio, Current
EV to EBITDA Ratio, Historical

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

Amazon.com Inc., EBITDA calculation

US$ in millions

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

Selected Financial Data (US$ in millions)
Enterprise value (EV)	882,284
Earnings before interest, tax, depreciation and amortization (EBITDA)	28,028
Valuation Ratio
EV/EBITDA	31.48
Benchmarks
EV/EBITDA, Competitors¹
Costco Wholesale Corp.	21.67
eBay Inc.	9.87
Home Depot Inc.	16.07
Lowe’s Cos. Inc.	18.12
Netflix Inc.	14.08
Target Corp.	10.12
TJX Cos. Inc.	13.82
Walmart Inc.	16.23
EV/EBITDA, Sector
General Retailers	18.78
EV/EBITDA, Industry
Consumer Services	15.75

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

¹ Click competitor name to see calculations.

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

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Selected Financial Data (US$ 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
Valuation Ratio
EV/EBITDA³	28.79	43.74	31.40	33.08	33.45
Benchmarks
EV/EBITDA, Competitors⁴
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 »

³ 2018 Calculation
EV/EBITDA = EV ÷ EBITDA
= 806,848 ÷ 28,028 = 28.79

⁴ Click competitor name to see calculations.

Valuation ratio	Description	The company
EV/EBITDA	Enterprise value to earnings before interest, tax, depreciation and amortization 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.