Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Illumina Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
The financial data exhibits a general upward trend in earnings metrics from 2016 through 2019, with some reversal in 2020. Net income attributable to stockholders increased from $463 million in 2016 to a peak of $1,002 million in 2019, before declining to $656 million in 2020. This indicates strong profitability growth over the initial years, followed by a notable contraction in the last year reported.
Earnings before tax (EBT) followed a somewhat similar trajectory, rising from $561 million in 2016 to $1,118 million in 2019. However, the decrease in 2020 to $856 million suggests that the company faced increased tax expenses or a reduction in profitability before taxes during that year.
Earnings before interest and tax (EBIT) also showed consistent growth from 2016 at $594 million to $1,170 million in 2019, with a subsequent decline to $905 million in 2020. The trend mirrors the EBT figures, reflecting operational profitability rising over the period and then diminishing in the last year.
EBITDA figures present a comparable pattern, increasing from $735 million in 2016 to a peak of $1,358 million in 2019, followed by a fall to $1,092 million in 2020. This suggests that the company experienced growth in earnings before the impact of depreciation, amortization, interest, and taxes, with some erosion of earnings capacity in the final year.
- Overall trend:
- Steady financial improvement from 2016 through 2019, followed by a decline in 2020 across all key earnings metrics.
- Net income trend:
- More than doubling from 2016 to 2019, then decreasing significantly in 2020, demonstrating volatility or challenges arising in the most recent year.
- EBT and EBIT trends:
- Both measures indicate improved operating performance up to 2019, with the drop in 2020 suggesting increased costs or reduced revenues impacting pre-tax profitability.
- EBITDA trend:
- Shows expansion in earnings potential before non-cash and financing expenses until 2019, with a partial retreat in 2020, pointing to possible operational pressures.
In summary, the company exhibited robust earnings growth over a four-year span, but 2020 presented setbacks that reversed some of these gains, highlighting potential challenges that may warrant further investigation.
Enterprise Value to EBITDA Ratio, Current
Illumina Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 61,504) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 1,092) |
| Valuation Ratio | |
| EV/EBITDA | 56.32 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| AbbVie Inc. | 26.12 |
| Amgen Inc. | 14.84 |
| Bristol-Myers Squibb Co. | 42.00 |
| Danaher Corp. | 21.35 |
| Eli Lilly & Co. | 50.51 |
| Gilead Sciences Inc. | 34.86 |
| Johnson & Johnson | 15.32 |
| Merck & Co. Inc. | 8.65 |
| Pfizer Inc. | 10.04 |
| Regeneron Pharmaceuticals Inc. | 9.47 |
| Thermo Fisher Scientific Inc. | 15.55 |
| Vertex Pharmaceuticals Inc. | 222.76 |
| EV/EBITDA, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 24.32 |
| EV/EBITDA, Industry | |
| Health Care | 21.20 |
Based on: 10-K (reporting date: 2020-12-31).
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
Illumina Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 69,822) | 41,239) | 41,525) | 31,596) | 23,847) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 1,092) | 1,358) | 1,130) | 1,236) | 735) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 63.94 | 30.37 | 36.75 | 25.56 | 32.43 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| AbbVie Inc. | 21.34 | — | — | — | — | |
| Amgen Inc. | 12.24 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 34.35 | — | — | — | — | |
| Danaher Corp. | 26.68 | — | — | — | — | |
| Eli Lilly & Co. | 23.67 | — | — | — | — | |
| Gilead Sciences Inc. | 24.90 | — | — | — | — | |
| Johnson & Johnson | 18.20 | — | — | — | — | |
| Merck & Co. Inc. | 16.05 | — | — | — | — | |
| Pfizer Inc. | 15.78 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 12.70 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 18.72 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 14.81 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 18.90 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Health Care | 17.33 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
3 2020 Calculation
EV/EBITDA = EV ÷ EBITDA
= 69,822 ÷ 1,092 = 63.94
4 Click competitor name to see calculations.
The financial data for the periods ending in 2016 through 2020 reveals several notable trends in enterprise value (EV), EBITDA, and their resulting valuation multiple EV/EBITDA.
- Enterprise Value (EV)
- The enterprise value demonstrates a consistent upward trajectory over the five-year period, rising from $23,847 million at the end of 2016 to $69,822 million by the end of 2020. This represents a nearly threefold increase, indicating significant growth in the company's market valuation or changes in its capital structure.
- EBITDA
- EBITDA figures show some volatility across the period. Starting at $735 million in 2016, EBITDA increased sharply in 2017 to $1,236 million, then declined somewhat in 2018 to $1,130 million. It rebounded again in 2019 to $1,358 million before falling back to $1,092 million in 2020. Overall, EBITDA does not display a clear growth trend but fluctuates, resulting in periods of both expansion and contraction in operating profitability.
- EV/EBITDA Ratio
- The valuation multiple, EV/EBITDA, exhibits significant variability. It declined from 32.43 in 2016 to 25.56 in 2017, reflecting the sharp EBITDA increase outpacing EV growth. However, in 2018, the ratio rose markedly to 36.75, driven by an increase in EV alongside a decrease in EBITDA. In 2019, the multiple decreased to 30.37 as EBITDA growth tempered the ratio. The year 2020 shows a dramatic spike to 63.94, driven primarily by a large increase in EV combined with a decrease in EBITDA. This elevated multiple may suggest heightened investor expectations or market conditions that led to a premium valuation, despite the dip in underlying earnings performance.
In summary, while enterprise value has grown substantially over the five years, EBITDA has experienced fluctuations without sustained growth. The EV/EBITDA multiple reflects these dynamics, evidencing periods of premium valuation especially in 2018 and significantly in 2020. The marked increase in the 2020 ratio could warrant further investigation into whether this reflects extraordinary market optimism, strategic transactions, or other factors impacting valuation relative to operating earnings.