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).
The operational performance from 2011 through 2015 is characterized by a period of relative stability followed by a severe contraction in profitability. EBITDA remained consistent between 2011 and 2014, fluctuating within a narrow range between 3,527 million US$ and 3,714 million US$, before experiencing a sharp decline in 2015 to 1,333 million US$.
- EBITDA and Operational Performance
- Between 2011 and 2014, EBITDA demonstrated resilience, reaching a peak in 2012. However, the substantial decrease observed in 2015 represents a significant reduction in operational earnings, indicating a precipitous drop in cash flow from core operations.
- Earnings Before Interest and Tax (EBIT) Trends
- EBIT followed a similar trajectory to EBITDA but showed a more pronounced downward trend starting in 2013. While EBITDA stayed relatively flat until 2014, EBIT declined from 3,002 million US$ in 2012 to 2,606 million US$ in 2014, suggesting an increase in non-cash charges during that interval.
- Net Income and Bottom-Line Correlation
- Net income attributable to the company mirrored the volatility of the operational metrics. After reaching a five-year high of 2,497 million US$ in 2014, net income plummeted to 968 million US$ in 2015. The simultaneous collapse of EBT, EBIT, and EBITDA in 2015 suggests that the loss in profitability was primarily driven by operational headwinds rather than isolated tax or interest events.
- Analysis of Depreciation and Amortization
- The variance between EBITDA and EBIT indicates a steady increase in depreciation and amortization expenses from 2011 (670 million US$) through 2014 (1,005 million US$), which pressured operating margins even while EBITDA remained stable. This trend reversed in 2015, with the variance decreasing to 759 million US$.
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Enterprise Value to EBITDA Ratio, Current
Baxter International Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ 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 | 16.66 |
| Elevance Health Inc. | 9.26 |
| Intuitive Surgical Inc. | 39.26 |
| Medtronic PLC | 15.64 |
| UnitedHealth Group Inc. | 17.82 |
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.
The financial trajectory from 2011 to 2015 is characterized by an initial expansion in enterprise value followed by a sharp contraction in both valuation and operational earnings. While the enterprise value and EBITDA both experienced significant declines in the final year of the period, the valuation multiple trended upward, reflecting a divergence between market value and cash flow generation.
- Enterprise Value Trends
- Enterprise value showed a consistent increase from 2011 through 2013, rising from 34,243 million USD to a peak of 44,093 million USD. This was followed by a marginal decline in 2014 and a substantial reduction in 2015, where the value fell to 20,781 million USD, representing a decrease of approximately 52% compared to the prior year.
- EBITDA Performance
- Operational earnings remained relatively stagnant between 2011 and 2014, fluctuating within a narrow range between 3,527 million USD and 3,714 million USD. A significant downturn occurred in 2015, with EBITDA falling to 1,333 million USD, marking a decline of approximately 63% from 2014 levels.
- EV/EBITDA Ratio Analysis
- The EV/EBITDA ratio exhibited a general upward trend, increasing from 9.59 in 2011 to 15.59 in 2015. From 2011 to 2013, the ratio rose as enterprise value grew while EBITDA remained flat. In 2015, despite the collapse in enterprise value, the ratio reached its period high because the decline in EBITDA was more severe than the decline in enterprise value, resulting in an inflated valuation multiple relative to operational performance.
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