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Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Abbott Laboratories, EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net earnings 477  1,400  4,423  2,284  2,576 
Less: Net earnings from discontinued operations, net of taxes 124  337  1,817  563  193 
Add: Income tax expense 1,878  350  577  797  138 
Earnings before tax (EBT) 2,231  1,413  3,183  2,518  2,521 
Add: Interest expense 904  431  163  150  157 
Earnings before interest and tax (EBIT) 3,135  1,844  3,346  2,668  2,678 
Add: Depreciation 1,046  803  871  918  928 
Add: Amortization of intangible assets 1,975  550  601  630  791 
Earnings before interest, tax, depreciation and amortization (EBITDA) 6,156  3,197  4,818  4,216  4,397 
Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Abbott Laboratories's EBITDA declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Enterprise Value to EBITDA Ratio, Current

Abbott Laboratories, current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 130,333 
Earnings before interest, tax, depreciation and amortization (EBITDA) 6,156 
Ratio
EV/EBITDA 21.17
Benchmarks
EV/EBITDA, Competitors
AbbVie Inc. 16.41
Allergan PLC
Amgen Inc. 9.38
Biogen Inc. 12.04
Bristol-Myers Squibb Co. 15.32
Celgene Corp. 12.37
Eli Lilly & Co. 25.76
Gilead Sciences Inc. 6.80
Johnson & Johnson 14.60
Merck & Co. Inc. 15.47
Pfizer Inc. 12.22
Regeneron Pharmaceuticals Inc. 17.32
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 14.38
EV/EBITDA, Industry
Health Care 14.61

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.


Enterprise Value to EBITDA Ratio, Historical

Abbott Laboratories, historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 123,592  80,634  59,755  74,978  58,461 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 6,156  3,197  4,818  4,216  4,397 
Ratio
EV/EBITDA3 20.08 25.22 12.40 17.78 13.30
Benchmarks
EV/EBITDA, Competitors
AbbVie Inc. 20.80 12.73 13.50 29.11 13.16
Allergan PLC 20.95 59.52 59.49 74.17
Amgen Inc. 9.37 9.60 9.91 13.96 14.22
Biogen Inc. 11.68 9.99 11.42 19.47 23.30
Bristol-Myers Squibb Co. 17.25 14.26 39.09 32.88 24.30
Celgene Corp. 14.20 28.50 31.19 34.11 30.94
Eli Lilly & Co. 22.72 18.40 19.15 18.17 8.65
Gilead Sciences Inc. 7.11 5.57 5.56 9.70 27.58
Johnson & Johnson 15.04 13.07 11.54 10.63 12.36
Merck & Co. Inc. 13.74 17.75 12.35 6.96 13.26
Pfizer Inc. 11.92 14.86 13.02 11.04 8.89
Regeneron Pharmaceuticals Inc. 15.13 26.10 28.77 47.11 40.56
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 14.59 13.50 13.31 13.52 14.20
EV/EBITDA, Industry
Health Care 14.56 13.38 13.26 13.26 13.44

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 123,592 ÷ 6,156 = 20.08

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Abbott Laboratories's EV/EBITDA ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017.