Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Celgene Corp., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The financial performance from 2014 to 2018 demonstrates a significant upward trajectory in profitability, particularly following a brief contraction in 2015. Overall earnings metrics exhibit an accelerating growth pattern, with the most substantial gains occurring between 2016 and 2018.
- EBITDA Growth Trend
- Earnings before interest, tax, depreciation and amortization exhibited a compound increase over the five-year period. After a slight decrease from US$ 2,877 million in 2014 to US$ 2,743 million in 2015, the metric grew aggressively, reaching US$ 6,208 million by December 31, 2018. This represents a total increase of approximately 115.7% from the 2014 baseline.
- Operating Profitability and EBIT
- Earnings before interest and tax followed a similar trajectory to EBITDA. Following the 2015 dip to US$ 2,334 million, EBIT increased substantially, peaking at US$ 5,573 million in 2018. The variance between EBITDA and EBIT indicates that depreciation and amortization expenses grew from US$ 373 million in 2014 to US$ 635 million in 2018, suggesting sustained investment in capital or intangible assets.
- Net Income and Tax Implications
- Net income surged from US$ 2,000 million in 2014 to US$ 4,046 million in 2018. A notable inflection point is observed between 2016 and 2017, during which net income grew by approximately 47%, coinciding with a sharp rise in earnings before tax (EBT) from US$ 2,373 million to US$ 4,314 million.
- Earnings Correlation and Consistency
- A strong positive correlation exists across all measured profitability levels. The synchronized movement of EBITDA, EBIT, EBT, and net income indicates that the growth was driven by core operational scaling rather than isolated financial engineering or one-time non-operating gains.
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Enterprise Value to EBITDA Ratio, Current
Celgene Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 91,115) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 6,208) |
| Valuation Ratio | |
| EV/EBITDA | 14.68 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| AbbVie Inc. | 30.03 |
| Amgen Inc. | 15.96 |
| Bristol-Myers Squibb Co. | 10.69 |
| Danaher Corp. | 24.71 |
| Eli Lilly & Co. | 40.15 |
| Gilead Sciences Inc. | 15.05 |
| Johnson & Johnson | 16.60 |
| Merck & Co. Inc. | 14.22 |
| Pfizer Inc. | 12.81 |
| Regeneron Pharmaceuticals Inc. | 12.93 |
| Thermo Fisher Scientific Inc. | 24.32 |
| Vertex Pharmaceuticals Inc. | 26.07 |
Based on: 10-K (reporting date: 2018-12-31).
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
Celgene Corp., 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 | 77,219) | 75,373) | 96,260) | 85,544) | 98,142) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 6,208) | 5,307) | 3,377) | 2,743) | 2,877) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 12.44 | 14.20 | 28.50 | 31.19 | 34.11 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
3 2018 Calculation
EV/EBITDA = EV ÷ EBITDA
= 77,219 ÷ 6,208 = 12.44
4 Click competitor name to see calculations.
A consistent contraction in the Enterprise Value to EBITDA (EV/EBITDA) multiple is observed over the five-year period from 2014 to 2018. The ratio declined from a high of 34.11 in 2014 to 12.44 in 2018, indicating a significant shift in the valuation of the entity relative to its operational cash flow.
- Enterprise Value (EV) Trends
- Enterprise Value exhibited volatility during the analyzed period, starting at 98,142 million USD in 2014 and reaching a low of 75,373 million USD in 2017. Although a slight increase to 77,219 million USD occurred in 2018, the overall trajectory represents a general reduction in total enterprise value.
- EBITDA Growth
- Earnings before interest, tax, depreciation, and amortization demonstrated a strong upward trend, particularly after 2015. EBITDA increased from 2,877 million USD in 2014 to 6,208 million USD in 2018. The most significant acceleration in earnings occurred between 2016 and 2018, where EBITDA nearly doubled from 3,377 million USD to 6,208 million USD.
- EV/EBITDA Ratio Interpretation
- The substantial compression of the EV/EBITDA ratio is driven by the divergence between declining enterprise value and rising operational profitability. The most abrupt decrease took place between 2016 and 2017, as the ratio fell from 28.50 to 14.20. This pattern suggests that the increase in operational earnings was not matched by an increase in market valuation, leading to a significantly lower valuation multiple by 2018.
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