Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Baxter International Inc., 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).
- Net Income Attributable to Baxter
- The net income demonstrated an overall upward trend from 2011 to 2014, increasing from 2,224 million US dollars in 2011 to 2,497 million US dollars in 2014. However, in 2015, there was a significant decline to 968 million US dollars, indicating a substantial reduction in profitability in the final observed year.
- Earnings Before Tax (EBT)
- EBT showed a similar pattern to net income, with a decline starting in 2013 after peaking in 2012 at 2,889 million US dollars. From 2013 to 2014, EBT decreased steadily from 2,549 million to 2,439 million US dollars. The drop became pronounced in 2015, with earnings falling sharply to 428 million US dollars, reflecting increased pressure on earnings before tax in that year.
- Earnings Before Interest and Tax (EBIT)
- EBIT followed a trend consistent with EBT, rising from 2,901 million US dollars in 2011 to a peak of 3,002 million US dollars in 2012 before declining gradually to 2,606 million in 2014. In 2015, EBIT experienced a drastic decrease to 574 million US dollars, which illustrates a notable reduction in operating profitability.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA maintained a relatively stable level from 2011 through 2014, fluctuating between 3,527 million and 3,714 million US dollars, with the highest figure recorded in 2012. The year 2015 marked a steep decline to 1,333 million US dollars, signaling a significant reduction in cash-generating capacity before non-cash expenses and financial considerations.
- Overall Analysis
- The financial data from 2011 to 2014 indicates a generally stable or improving earnings trend across all measures, with slight fluctuations but maintaining strong profitability and cash flow generation. However, fiscal year 2015 reveals a marked downturn across all earnings categories, with net income, EBT, EBIT, and EBITDA each experiencing significant declines. This sharp contraction suggests the occurrence of adverse business conditions or extraordinary events impacting the company's financial performance in that year. The consistent pattern of decline in 2015 across different profitability measures warrants close examination and may indicate challenges in operational efficiency, market conditions, or other factors affecting earnings quality.
Enterprise Value to EBITDA Ratio, Current
Baxter International Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 25,328) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 1,333) |
| Valuation Ratio | |
| EV/EBITDA | 19.00 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Abbott Laboratories | 21.89 |
| Elevance Health Inc. | 5.77 |
| Intuitive Surgical Inc. | 52.46 |
| Medtronic PLC | 14.83 |
| UnitedHealth Group Inc. | 9.81 |
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
Baxter International Inc., 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 | 20,781) | 43,675) | 44,093) | 38,961) | 34,243) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 1,333) | 3,611) | 3,527) | 3,714) | 3,571) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 15.59 | 12.10 | 12.50 | 10.49 | 9.59 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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
= 20,781 ÷ 1,333 = 15.59
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value showed an increasing trend from 2011 through 2014, rising from $34,243 million in 2011 to a peak of $44,093 million in 2013, before slightly decreasing to $43,675 million in 2014. However, in 2015, there was a significant decline to $20,781 million, amounting to less than half of the previous year's value. This sharp decrease indicates a substantial reduction in the market valuation or total capitalization of the company in 2015.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA demonstrated a relatively stable pattern in the years 2011 to 2014, fluctuating modestly between $3,527 million and $3,714 million. Despite minor variations, the company maintained a consistent earnings performance during this period. Conversely, in 2015, EBITDA experienced a sharp decline to $1,333 million, which represents a drastic decrease of approximately 63% compared to 2014. This decline reflects a significant reduction in the company's operational profitability.
- EV/EBITDA Ratio
- The EV/EBITDA ratio increased steadily from 9.59 in 2011 to reach 12.5 in 2013, followed by a slight decrease to 12.1 in 2014. In 2015, the ratio escalated remarkably to 15.59. This elevated ratio in 2015, despite the decrease in enterprise value, can be attributed to the disproportionately large drop in EBITDA, indicating that the company's valuation relative to its earnings before interest, taxes, depreciation, and amortization became more expensive or less efficient at generating operational earnings. The rising ratio over the years before 2015 suggests growing market expectations or reduced profitability margins leading up to 2015.