Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Lam Research Corp., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
The financial data reveals a clear upward trend in earnings metrics from 2019 through 2022, followed by a moderate decline in the most recent periods.
- Net Income
- Net income increased steadily from approximately $2.19 billion in mid-2019 to a peak of about $4.61 billion in mid-2022. After reaching this high point, it decreased to approximately $3.83 billion by mid-2024, indicating some contraction in profitability over the last two years.
- Earnings Before Tax (EBT)
- EBT followed a similar pattern, rising from roughly $2.45 billion in mid-2019 to a high of approximately $5.19 billion in mid-2022. After this peak, EBT declined to about $4.36 billion by mid-2024, paralleling the trend seen in net income and suggesting pressures on pre-tax earnings in the recent period.
- Earnings Before Interest and Tax (EBIT)
- EBIT showed consistent growth from $2.56 billion in 2019 to $5.38 billion in 2022, before decreasing to $4.55 billion by 2024. The movement aligns closely with EBT trends, indicating that core operating profitability improved substantially before contracting moderately thereafter.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA also displayed growth, rising from around $2.87 billion in mid-2019 to a peak near $5.71 billion in mid-2022. This was followed by a reduction to approximately $4.91 billion in mid-2024, reflecting a decrease in overall operational cash profitability.
Overall, the company experienced significant earnings growth over the 2019-2022 period, nearly doubling most metrics. However, from 2022 to 2024, there is evidence of a downward correction across all key earnings measures, suggesting a cyclical or external factor impacting recent performance. Despite this decline, the 2024 figures remain considerably higher than those at the start of the analyzed period, indicating sustained long-term growth with recent softness.
Enterprise Value to EBITDA Ratio, Current
Lam Research Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 123,465,744) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,905,157) |
| Valuation Ratio | |
| EV/EBITDA | 25.17 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Advanced Micro Devices Inc. | 44.37 |
| Analog Devices Inc. | 29.21 |
| Applied Materials Inc. | 16.36 |
| Broadcom Inc. | 55.49 |
| Intel Corp. | 110.29 |
| KLA Corp. | 30.70 |
| Micron Technology Inc. | 15.14 |
| NVIDIA Corp. | 44.28 |
| Qualcomm Inc. | 13.77 |
| Texas Instruments Inc. | 25.74 |
| EV/EBITDA, Sector | |
| Semiconductors & Semiconductor Equipment | 55.70 |
| EV/EBITDA, Industry | |
| Information Technology | 33.91 |
Based on: 10-K (reporting date: 2024-06-30).
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
Lam Research Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 102,685,613) | 86,575,659) | 64,909,177) | 82,774,600) | 55,446,762) | 30,721,104) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,905,157) | 5,638,104) | 5,711,612) | 4,886,552) | 3,020,943) | 2,873,115) | |
| Valuation Ratio | |||||||
| EV/EBITDA3 | 20.93 | 15.36 | 11.36 | 16.94 | 18.35 | 10.69 | |
| Benchmarks | |||||||
| EV/EBITDA, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 34.40 | 65.81 | 22.63 | 34.19 | 62.10 | — | |
| Analog Devices Inc. | 27.10 | 15.56 | 16.23 | 38.55 | 23.61 | 18.67 | |
| Applied Materials Inc. | 15.31 | 15.75 | 11.04 | 17.54 | 16.82 | 14.60 | |
| Broadcom Inc. | 45.78 | 26.42 | 13.54 | 19.72 | 18.89 | 16.32 | |
| Intel Corp. | 97.96 | 18.96 | 6.20 | 6.02 | 6.40 | — | |
| KLA Corp. | 24.77 | 15.67 | 14.97 | 19.26 | 18.10 | 14.14 | |
| Micron Technology Inc. | 12.40 | 32.38 | 3.26 | 6.05 | 6.46 | 3.90 | |
| NVIDIA Corp. | 46.95 | 95.69 | 57.58 | 58.98 | 52.92 | — | |
| Qualcomm Inc. | 15.19 | 12.82 | 7.84 | 12.76 | 19.49 | 10.55 | |
| Texas Instruments Inc. | 22.89 | 16.36 | 14.69 | 15.54 | 21.75 | — | |
| EV/EBITDA, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 33.98 | 26.56 | 14.51 | 15.52 | 14.73 | — | |
| EV/EBITDA, Industry | |||||||
| Information Technology | 27.64 | 23.56 | 18.28 | 20.46 | 19.69 | — | |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
3 2024 Calculation
EV/EBITDA = EV ÷ EBITDA
= 102,685,613 ÷ 4,905,157 = 20.93
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a generally upward trend from June 30, 2019, to June 30, 2024. Starting at approximately 30.7 billion US dollars in mid-2019, EV increased sharply to 55.4 billion by mid-2020 and continued to rise to a peak of about 82.8 billion in mid-2021. Despite a decline to roughly 64.9 billion in mid-2022, the value rebounded to 86.6 billion in mid-2023 and further increased to a new high of approximately 102.7 billion by mid-2024. This indicates substantial growth in the market valuation or perceived value of the company over the five-year period, with some volatility during 2022.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA showed an overall increasing trend from mid-2019 to mid-2022, rising from about 2.87 billion US dollars to approximately 5.71 billion US dollars. However, from mid-2022 onward, EBITDA declined to 5.64 billion in mid-2023 and further dropped to around 4.91 billion in mid-2024. This pattern suggests that although operational profitability strengthened until 2022, it experienced a notable reduction in the subsequent two years, indicating potential challenges affecting earnings generation during that period.
- EV/EBITDA Ratio
- The EV/EBITDA ratio fluctuated throughout the analyzed years. It began at 10.69 in 2019, increased substantially to a peak of 18.35 in 2020, and decreased slightly to 16.94 in 2021. The ratio dropped further to 11.36 in 2022, indicating improved valuation relative to earnings. In 2023, the ratio rose again to 15.36, and then sharply to 20.93 in 2024, reflecting a higher enterprise value per unit of EBITDA. The rising ratio in the latest periods may indicate that the market valuation has outpaced earnings growth, possibly signifying increased investor expectations or valuation pressures despite declining EBITDA.
- Summary of Trends
- Over the five-year span, enterprise value consistently increased with some volatility, reaching its highest point in mid-2024. EBITDA growth was strong until 2022 but declined thereafter, suggesting profitability challenges or increased costs. The EV/EBITDA ratio movements reflect changing market dynamics, where the company’s valuation relative to its operational earnings has become more stretched recently. The elevated ratio in 2024 points to potential market optimism or reevaluation, even as actual earnings before depreciation and amortization decreased. This divergence merits further investigation into the factors driving valuation versus earnings performance in recent years.