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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, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income attributable to shareowners of The Coca-Cola Company 1,248  6,527  7,351  7,098  8,584 
Add: Net income attributable to noncontrolling interest 35  23  15  26  42 
Less: Income from discontinued operations, net of income taxes 101  –  –  –  – 
Add: Income tax expense 5,560  1,586  2,239  2,201  2,851 
Earnings before tax (EBT) 6,742  8,136  9,605  9,325  11,477 
Add: Interest expense 841  733  856  483  463 
Earnings before interest and tax (EBIT) 7,583  8,869  10,461  9,808  11,940 
Add: Depreciation and amortization 1,260  1,787  1,970  1,976  1,977 
Earnings before interest, tax, depreciation and amortization (EBITDA) 8,843  10,656  12,431  11,784  13,917 

Based on: 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), 10-K (filing date: 2014-02-27).

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 2015 to 2016 and from 2016 to 2017.

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) 242,464 
Earnings before interest, tax, depreciation and amortization (EBITDA) 8,843 
Ratio
EV/EBITDA 27.42
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc. 14.25
EV/EBITDA, Sector
Beverages 19.55
EV/EBITDA, Industry
Consumer Goods 12.05

Based on: 10-K (filing date: 2018-02-23).

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, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 216,786  203,047  215,714  203,912  184,810 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 8,843  10,656  12,431  11,784  13,917 
Ratio
EV/EBITDA3 24.51 19.05 17.35 17.30 13.28
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc. 13.65 14.13 14.91 13.75 11.15
EV/EBITDA, Sector
Beverages 18.02 16.42 16.22 15.49 12.27
EV/EBITDA, Industry
Consumer Goods 12.30 11.84 12.68 13.08 10.91

Based on: 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), 10-K (filing date: 2014-02-27).

1 See Details »

2 See Details »

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 216,786 ÷ 8,843 = 24.51

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 2015 to 2016 and from 2016 to 2017.