Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Carrier Global Corp., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
A comprehensive analysis of the profitability metrics reveals a V-shaped trend between 2020 and 2022. After a moderate decline across all earnings levels in 2021, there was a substantial acceleration in performance during 2022, with all indicators reaching their highest levels within the observed period.
- EBITDA Performance and Trends
- Earnings before interest, tax, depreciation and amortization exhibited a contraction of approximately 12.4% from 2020 to 2021, falling from 3,489 million USD to 3,057 million USD. This decline was reversed in 2022, as EBITDA surged to 4,974 million USD, representing a significant increase of 62.7% over the prior year and a 42.5% increase relative to 2020 levels.
- Profitability Conversion and Operating Efficiency
- The trajectory of Earnings before interest and tax (EBIT) closely mirrored that of EBITDA, decreasing in 2021 before rising sharply to 4,594 million USD in 2022. The relative stability in the gap between EBITDA and EBIT suggests that depreciation and amortization expenses remained consistent, ranging from 336 million USD in 2020 to 380 million USD in 2022, indicating that the growth in 2022 was driven by operational gains rather than changes in asset accounting.
- Net Income and Bottom-Line Impact
- Net income attributable to common shareowners followed the same pattern, dipping to 1,664 million USD in 2021 before more than doubling to 3,534 million USD in 2022. The expansion from Earnings before tax (EBT) to net income indicates a stable tax environment, as the increase in bottom-line profitability scaled proportionally with the growth in operating earnings.
- Financial Leverage and Interest Stability
- The difference between EBIT and EBT remained remarkably stable throughout the three-year period, fluctuating narrowly between 298 million USD and 319 million USD. This consistency suggests that interest expenses and non-operating financial costs did not fluctuate significantly, allowing the operational growth observed in EBITDA to flow efficiently through to the pre-tax and net income levels.
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Enterprise Value to EBITDA Ratio, Current
Carrier Global Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 39,576) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,974) |
| Valuation Ratio | |
| EV/EBITDA | 7.96 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | 22.42 |
| Caterpillar Inc. | 21.17 |
| Eaton Corp. plc | 23.68 |
| GE Aerospace | 28.91 |
| Honeywell International Inc. | 11.61 |
| Lockheed Martin Corp. | 17.77 |
| RTX Corp. | 20.08 |
| EV/EBITDA, Sector | |
| Capital Goods | 30.31 |
| EV/EBITDA, Industry | |
| Industrials | 24.19 |
Based on: 10-K (reporting date: 2022-12-31).
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
Carrier Global Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Enterprise value (EV)1 | 42,670) | 46,441) | 39,816) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,974) | 3,057) | 3,489) | |
| Valuation Ratio | ||||
| EV/EBITDA3 | 8.58 | 15.19 | 11.41 | |
| Benchmarks | ||||
| EV/EBITDA, Competitors4 | ||||
| Boeing Co. | — | — | — | |
| Caterpillar Inc. | 13.86 | 12.43 | — | |
| Eaton Corp. plc | 19.18 | 17.06 | — | |
| GE Aerospace | 14.82 | 95.57 | — | |
| Honeywell International Inc. | 18.01 | 15.57 | — | |
| Lockheed Martin Corp. | 14.98 | 11.97 | — | |
| RTX Corp. | 14.92 | 15.48 | — | |
| EV/EBITDA, Sector | ||||
| Capital Goods | 19.01 | 19.87 | — | |
| EV/EBITDA, Industry | ||||
| Industrials | 16.46 | 16.30 | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 42,670 ÷ 4,974 = 8.58
4 Click competitor name to see calculations.
A review of the financial metrics from 2020 to 2022 reveals significant volatility in the valuation multiple relative to operational earnings. The period is characterized by a sharp increase in the valuation ratio during 2021, followed by a substantial contraction in 2022.
- Enterprise Value (EV) Trends
- The Enterprise Value exhibited an upward movement from 39,816 million in 2020 to a peak of 46,441 million in 2021, before moderating to 42,670 million by the end of 2022.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization experienced a decline in 2021, falling to 3,057 million from 3,489 million in the previous year. However, a significant recovery was observed in 2022, as EBITDA rose to 4,974 million, marking a substantial increase in operational profitability.
- EV/EBITDA Ratio Analysis
- The EV/EBITDA ratio increased from 11.41 in 2020 to 15.19 in 2021, a trend driven by the simultaneous rise in Enterprise Value and the contraction of EBITDA. In 2022, the ratio declined sharply to 8.58. This compression was primarily the result of the surge in EBITDA, which far outweighed the slight decrease in Enterprise Value, suggesting a more favorable valuation relative to earnings capacity at the close of the period.
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