Altria Group Inc. (MO)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Altria Group Inc., EBITDA calculation

USD $ in millions

12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net earnings attributable to Altria Group, Inc.	10,222	14,239	5,241	5,070	4,535
Add: Net income attributable to noncontrolling interest	5	5	2	–	–
Add: Income tax expense	(399)	7,608	2,835	2,704	2,407
Earnings before tax (EBT)	9,828	21,852	8,078	7,774	6,942
Add: Interest expense	727	754	808	857	1,053
Earnings before interest and tax (EBIT)	10,555	22,606	8,886	8,631	7,995
Add: Depreciation and amortization	209	204	225	208	212
Earnings before interest, tax, depreciation and amortization (EBITDA)	10,764	22,810	9,111	8,839	8,207

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.	Altria Group Inc.'s EBITDA increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

Altria Group Inc., current EV/EBITDA calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)	127,093
Earnings before interest, tax, depreciation and amortization (EBITDA)	10,764
Ratio
EV/EBITDA	11.81
Benchmarks
EV/EBITDA, Competitors
Philip Morris International Inc.	12.04
EV/EBITDA, Sector
Tobacco	11.93
EV/EBITDA, Industry
Consumer Goods	11.79

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.

Altria Group Inc., historical EV/EBITDA calculation, comparison to benchmarks

	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	134,273	153,976	132,679	120,941	81,968
Earnings before interest, tax, depreciation and amortization (EBITDA)²	10,764	22,810	9,111	8,839	8,207
Ratio
EV/EBITDA³	12.47	6.75	14.56	13.68	9.99
Benchmarks
EV/EBITDA, Competitors
Philip Morris International Inc.	14.88	15.70	14.49	12.30	10.49
EV/EBITDA, Sector
Tobacco	13.77	9.81	14.52	12.87	10.31
EV/EBITDA, Industry
Consumer Goods	12.30	11.84	12.68	13.08	10.91

2017 Calculations

³ EV/EBITDA = EV ÷ EBITDA
= 134,273 ÷ 10,764 = 12.47

Ratio	Description	The company
EV/EBITDA	EV/EBITDA is a valuation indicator for the overall company rather than common stock.	Altria Group Inc.'s EV/EBITDA ratio declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.