Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Apache Corp., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
A significant and accelerating downward trend is evident across all key profitability metrics between 2011 and 2015. While core operational indicators remained positive throughout the period, the bottom-line results shifted from substantial profitability to severe losses.
- EBITDA Performance
- Earnings before interest, tax, depreciation and amortization decreased steadily from US$ 12,467 million in 2011 to US$ 1,405 million in 2015. The most pronounced decline occurred between 2013 and 2015, with the 2015 value representing a reduction of approximately 88.7% from the 2011 peak.
- Operational Profitability (EBIT and EBT)
- Earnings before interest and tax (EBIT) and earnings before tax (EBT) followed a trajectory similar to EBITDA but transitioned into negative territory more rapidly. EBIT fell from US$ 8,263 million in 2011 to a loss of US$ 27,967 million by 2015, indicating that non-cash charges and operational costs heavily outweighed earnings in the final two years of the analyzed period.
- Net Income Trajectory
- Net income attributable to shareholders experienced the most extreme volatility, dropping from US$ 4,584 million in 2011 to a loss of US$ 23,119 million in 2015. The transition from profitability to loss occurred in 2014, with the deficit expanding more than fourfold in 2015.
- Metric Divergence and Insights
- A widening gap is observed between EBITDA and the net income figures. Because EBITDA remained positive while EBIT and Net Income collapsed into deep negatives, it is evident that depreciation, amortization, or significant non-cash impairment charges exerted a dominant influence on the financial results during 2014 and 2015.
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Enterprise Value to EBITDA Ratio, Current
Apache Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 28,012) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 1,405) |
| Valuation Ratio | |
| EV/EBITDA | 19.94 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Chevron Corp. | 11.22 |
| ConocoPhillips | 7.16 |
| ExxonMobil Holdings Corp. | 10.53 |
Based on: 10-K (reporting date: 2015-12-31).
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
Apache Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 23,904) | 37,486) | 41,114) | 42,304) | 49,628) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 1,405) | 7,388) | 11,113) | 12,161) | 12,467) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 17.01 | 5.07 | 3.70 | 3.48 | 3.98 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
3 2015 Calculation
EV/EBITDA = EV ÷ EBITDA
= 23,904 ÷ 1,405 = 17.01
4 Click competitor name to see calculations.
Between 2011 and 2015, a significant divergence emerged between the company's enterprise value and its operational earnings. While both metrics experienced a downward trajectory over the five-year period, the collapse in earnings significantly outpaced the decline in valuation, resulting in a sharp expansion of the EV/EBITDA multiple.
- Enterprise Value (EV) Trend
- A consistent decline in enterprise value is observed, falling from 49,628 million in 2011 to 23,904 million by 2015. This represents an overall reduction of approximately 51.8% over the period, indicating a steady contraction in the total market valuation of the entity.
- EBITDA Performance
- Operational earnings exhibited relative stability between 2011 and 2013, maintaining levels above 11,000 million. However, a severe contraction began in 2014, with earnings dropping to 7,388 million and plummeting further to 1,405 million by 2015. This represents a total decrease of approximately 88.7% from the 2011 peak, signaling a substantial erosion of cash-flow generating capacity.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio remained stable between 3.48 and 3.98 from 2011 through 2013. A marked upward shift occurred in 2014, with the ratio rising to 5.07, followed by an exponential spike to 17.01 in 2015. This dramatic increase suggests that while the market value of the firm decreased, it did not decline nearly as fast as the operational earnings, leading to a valuation multiple that is significantly higher relative to the diminished EBITDA.
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