Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Air Products & Chemicals Inc., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
An analysis of the financial performance from September 30, 2015, to September 30, 2020, reveals a general upward trajectory in operational profitability, characterized by steady growth in EBITDA and EBIT, despite a notable contraction in 2017.
- EBITDA Growth and Volatility
- EBITDA increased from US$ 2,773,400 thousand in 2015 to US$ 3,718,100 thousand in 2020. While the overall trend is positive, a significant decline occurred in 2017, where values dropped to US$ 2,402,500 thousand before recovering and reaching peak levels in the final two years of the period.
- Operating and Pre-tax Earnings Trends
- EBIT and EBT closely mirrored the movements of EBITDA. EBIT rose from US$ 1,837,000 thousand in 2015 to US$ 2,533,100 thousand in 2020, while EBT increased from US$ 1,733,500 thousand to US$ 2,423,800 thousand over the same period. The correlation between these metrics suggests that operational performance was the primary driver of pre-tax profitability.
- Net Income Divergence
- Net income attributable to the company exhibited substantial volatility that did not always align with operational metrics. Notably, in 2017, net income peaked at US$ 3,000,400 thousand despite a simultaneous decline in EBITDA and EBIT, indicating the presence of significant non-operating gains or one-time financial adjustments during that fiscal year.
- Depreciation and Amortization Analysis
- The variance between EBITDA and EBIT highlights a steady increase in depreciation and amortization expenses. This gap expanded from US$ 936,400 thousand in 2015 to US$ 1,185,000 thousand in 2020, suggesting a consistent expansion of the company's capital asset base or increased investment in long-term infrastructure.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Enterprise Value to EBITDA Ratio, Current
Air Products & Chemicals Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 62,954,505) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 3,718,100) |
| Valuation Ratio | |
| EV/EBITDA | 16.93 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Linde plc | 18.80 |
| Sherwin-Williams Co. | 19.83 |
Based on: 10-K (reporting date: 2020-09-30).
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
Air Products & Chemicals Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 61,669,949) | 52,915,712) | 35,745,103) | 35,621,405) | 35,233,696) | 35,850,244) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 3,718,100) | 3,509,300) | 3,116,200) | 2,402,500) | 3,173,600) | 2,773,400) | |
| Valuation Ratio | |||||||
| EV/EBITDA3 | 16.59 | 15.08 | 11.47 | 14.83 | 11.10 | 12.93 | |
| Benchmarks | |||||||
| EV/EBITDA, Competitors4 | |||||||
| Linde plc | — | — | — | — | — | — | |
| Sherwin-Williams Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
3 2020 Calculation
EV/EBITDA = EV ÷ EBITDA
= 61,669,949 ÷ 3,718,100 = 16.59
4 Click competitor name to see calculations.
The analysis of the Enterprise Value to EBITDA ratio reveals a shift from relative valuation stability between 2015 and 2018 to a period of significant valuation expansion from 2019 through 2020.
- Enterprise Value (EV) Trends
- Enterprise value remained consistently within the 35 billion range from 2015 to 2018. A substantial upward shift occurred starting in 2019, with the value increasing to 52.92 billion and further ascending to 61.67 billion by 2020, representing a total increase of approximately 72% from the 2018 level.
- EBITDA Performance
- EBITDA exhibited a general growth trend, rising from 2.77 billion in 2015 to 3.72 billion in 2020. A notable anomaly occurred in 2017, where EBITDA dropped to 2.40 billion, causing a temporary spike in the valuation multiple before recovering to 3.12 billion in 2018.
- EV/EBITDA Multiple Interpretation
- The valuation multiple fluctuated between 11.10 and 14.83 during the first four years of the period. Beginning in 2019, the ratio entered a new growth phase, rising to 15.08 and peaking at 16.59 in 2020. This expansion in the multiple is primarily driven by the rapid increase in enterprise value, which outpaced the growth in earnings before interest, taxes, depreciation, and amortization.
The divergence between the growth rates of enterprise value and EBITDA in the final two years suggests a significant increase in the market's valuation of the entity or a substantial change in its capital structure during that timeframe.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?