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Coca-Cola Co. (KO)


Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Coca-Cola Co., EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income attributable to shareowners of The Coca-Cola Company 6,434  1,248  6,527  7,351  7,098 
Add: Net income attributable to noncontrolling interest 42  35  23  15  26 
Less: Income (loss) from discontinued operations, net of income taxes (251) 101  —  —  — 
Add: Income tax expense 1,623  5,560  1,586  2,239  2,201 
Earnings before tax (EBT) 8,350  6,742  8,136  9,605  9,325 
Add: Interest expense 919  841  733  856  483 
Earnings before interest and tax (EBIT) 9,269  7,583  8,869  10,461  9,808 
Add: Depreciation and amortization 1,086  1,260  1,787  1,970  1,976 
Earnings before interest, tax, depreciation and amortization (EBITDA) 10,355  8,843  10,656  12,431  11,784 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

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. Coca-Cola Co.’s EBITDA declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Enterprise Value to EBITDA Ratio, Current

Coca-Cola Co., current EV/EBITDA calculation, comparison to benchmarks

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Selected Financial Data (USD $ in millions)
Enterprise value (EV) 252,061 
Earnings before interest, tax, depreciation and amortization (EBITDA) 10,355 
Ratio
EV/EBITDA 24.34
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc. 15.94
EV/EBITDA, Sector
Beverages 19.65
EV/EBITDA, Industry
Consumer Goods 15.77

Based on: 10-K (filing date: 2019-02-21).

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.


Enterprise Value to EBITDA Ratio, Historical

Coca-Cola Co., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 225,735  216,786  203,047  215,714  203,912 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 10,355  8,843  10,656  12,431  11,784 
Ratio
EV/EBITDA3 21.80 24.51 19.05 17.35 17.30
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc. 14.05 13.65 14.13 14.91 13.75
EV/EBITDA, Sector
Beverages 17.47 18.02 16.42 16.22 15.49
EV/EBITDA, Industry
Consumer Goods 14.02 12.30 11.84 12.68 13.08

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

2018 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 225,735 ÷ 10,355 = 21.80

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Coca-Cola Co.’s EV/EBITDA ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018.