Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Diamondback Energy Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial performance of Diamondback Energy Inc. between 2017 and 2021 is characterized by significant volatility, featuring an initial growth phase, a severe contraction in 2020, and a robust recovery by the end of the period.
- EBITDA Trend Analysis
- Earnings before interest, tax, depreciation and amortization exhibited a consistent upward trajectory from 2017 to 2019, increasing from 864 million US$ to 1,985 million US$. This growth was abruptly reversed in 2020, when EBITDA fell to a deficit of 4,270 million US$. However, a sharp rebound occurred in 2021, with EBITDA reaching a period high of 4,371 million US$, indicating a strong operational recovery.
- Net Income and Earnings Volatility
- Net income followed a similar pattern of instability but demonstrated higher sensitivity. After peaking at 846 million US$ in 2018, net income declined in 2019 to 240 million US$ and plummeted to a loss of 4,517 million US$ in 2020. The subsequent recovery in 2021 saw net income return to profitability at 2,182 million US$, reflecting a significant reversal of the previous year's losses.
- Comparative Margin Analysis
- A divergence is observed in 2019, where EBITDA continued to grow while net income and EBIT declined. This suggests an increase in non-cash expenses, such as depreciation and amortization, or higher interest and tax burdens during that fiscal year. The disparity between EBIT and EBITDA remained substantial throughout the period, highlighting the impact of significant capital asset depreciation on the bottom line.
- 2020 Fiscal Collapse and 2021 Rebound
- The year 2020 represents a critical anomaly across all measured metrics, with EBT, EBIT, and EBITDA all entering negative territory. The magnitude of the loss in Earnings before tax (5,776 million US$) highlights a severe erosion of profitability. The 2021 results not only erased these losses but exceeded 2019 performance levels across every metric, signifying a rapid restoration of earning capacity.
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Enterprise Value to EBITDA Ratio, Current
Diamondback Energy Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 35,957) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,371) |
| Valuation Ratio | |
| EV/EBITDA | 8.23 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Chevron Corp. | 11.22 |
| ConocoPhillips | 7.16 |
| ExxonMobil Holdings Corp. | 10.53 |
| EV/EBITDA, Sector | |
| Oil, Gas & Consumable Fuels | 11.82 |
| EV/EBITDA, Industry | |
| Energy | 12.03 |
Based on: 10-K (reporting date: 2021-12-31).
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
Diamondback Energy Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 29,862) | 17,630) | 16,315) | 22,025) | 13,977) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,371) | (4,270) | 1,985) | 1,816) | 864) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 6.83 | — | 8.22 | 12.13 | 16.18 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Chevron Corp. | 7.18 | — | — | — | — | |
| ConocoPhillips | 6.34 | — | — | — | — | |
| ExxonMobil Holdings Corp. | 7.07 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 6.97 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Energy | 7.24 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/EBITDA = EV ÷ EBITDA
= 29,862 ÷ 4,371 = 6.83
4 Click competitor name to see calculations.
The analysis of valuation metrics from 2017 to 2021 reveals a consistent compression of the Enterprise Value to EBITDA (EV/EBITDA) multiple, despite significant volatility in both Enterprise Value and operational earnings.
- Enterprise Value Trends
- Enterprise Value exhibited notable fluctuations, starting at 13,977 million US$ in 2017 and reaching a peak of 29,862 million US$ by 2021. An initial increase was observed between 2017 and 2018, followed by a contraction in 2019 and a subsequent sharp escalation in 2021.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization showed a steady upward trend in the early period, increasing from 864 million US$ in 2017 to 1,985 million US$ in 2019. A severe anomaly occurred in 2020, where EBITDA declined to negative 4,270 million US$, before a substantial recovery to 4,371 million US$ in 2021.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio followed a persistent downward trajectory, decreasing from 16.18 in 2017 to 8.22 in 2019. While the ratio was not applicable in 2020 due to negative earnings, it reached its lowest point of 6.83 in 2021. This trend indicates that the growth in operational earnings power has significantly outpaced the growth in Enterprise Value over the observed five-year period.
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