Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Etsy Inc., EBITDA calculation
US$ in thousands
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 from 2017 to 2021 demonstrates a period of substantial growth in earnings capacity, marked by a significant acceleration in operational profitability starting in 2020.
- EBITDA Expansion
- Earnings before interest, tax, depreciation, and amortization grew steadily from US$ 70,592 thousand in 2017 to US$ 152,997 thousand in 2019. This was followed by an exponential increase in 2020 to US$ 465,923 thousand, and a further climb to US$ 555,806 thousand by the end of 2021.
- Analysis of Operating Margins
- A consistent gap exists between EBITDA and EBIT, reflecting the impact of depreciation and amortization. The absolute difference between these two metrics increased from US$ 27,197 thousand in 2017 to US$ 74,267 thousand in 2021, indicating an expansion of the asset base over the five-year period.
- Net Income Convergence
- The growth in EBITDA is strongly correlated with Net Income, which rose from US$ 81,800 thousand in 2017 to US$ 493,507 thousand in 2021. The sharp rise in Net Income between 2019 and 2020 aligns with the surge in EBITDA, suggesting that operational gains were not offset by proportional increases in interest or tax burdens.
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Enterprise Value to EBITDA Ratio, Current
Etsy Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 13,976,109) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 555,806) |
| Valuation Ratio | |
| EV/EBITDA | 25.15 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Amazon.com Inc. | 17.20 |
| Home Depot Inc. | 16.27 |
| Lowe’s Cos. Inc. | 13.42 |
| TJX Cos. Inc. | 18.08 |
| EV/EBITDA, Sector | |
| Consumer Discretionary Distribution & Retail | 33.20 |
| EV/EBITDA, Industry | |
| Consumer Discretionary | 30.62 |
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
Etsy 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 thousands) | ||||||
| Enterprise value (EV)1 | 20,323,794) | 27,211,471) | 6,861,370) | 8,239,666) | 2,805,862) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 555,806) | 465,923) | 152,997) | 103,998) | 70,592) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 36.57 | 58.40 | 44.85 | 79.23 | 39.75 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Amazon.com Inc. | 21.27 | — | — | — | — | |
| Home Depot Inc. | 16.53 | — | — | — | — | |
| Lowe’s Cos. Inc. | 14.41 | — | — | — | — | |
| TJX Cos. Inc. | 65.35 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 20.16 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Consumer Discretionary | 21.51 | — | — | — | — | |
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
= 20,323,794 ÷ 555,806 = 36.57
4 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 is characterized by substantial expansion in both enterprise valuation and operational earnings, although the relationship between these two metrics remained volatile.
- Enterprise Value (EV) Trends
- The enterprise value experienced significant volatility and growth, ascending from 2.8 billion in 2017 to a peak of 27.2 billion in 2020. A subsequent correction occurred in 2021, with the value decreasing to 20.3 billion. This peak in 2020 represents a nearly tenfold increase from the 2017 baseline, indicating a period of aggressive market valuation expansion.
- EBITDA Growth Profile
- Operational profitability, as measured by EBITDA, demonstrated consistent year-over-year growth. Earnings rose steadily from 70.6 million in 2017 to 555.8 million in 2021. This uninterrupted upward trend suggests a strong and scalable improvement in core operational efficiency regardless of the fluctuations in overall enterprise valuation.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio exhibited significant fluctuations, peaking at 79.23 in 2018. After a decline in 2019, the ratio rose again to 58.40 in 2020, mirroring the surge in enterprise value. By 2021, the ratio contracted to 36.57, the lowest level observed in the five-year period. This decline indicates a valuation compression and suggests that earnings growth began to catch up with the market valuation.
The analysis reveals a transition from a period of high-multiple valuation growth to a more moderated valuation relative to earnings by the end of 2021.
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