Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Colgate-Palmolive Co., 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), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The operational profitability of the company exhibited significant volatility between 2018 and 2022, characterized by a peak in 2020 followed by a sustained contraction. The overall trend across all earnings metrics indicates a period of growth and stability that transitioned into a consistent decline in the latter two years of the period.
- EBITDA Performance and Trends
- Earnings before interest, tax, depreciation and amortization reached a five-year peak of 4,369 million USD in 2020. This followed a slight dip in 2019, where the value stood at 4,012 million USD. However, a marked downward trend is observed starting in 2021, with EBITDA falling to 3,760 million USD and further declining to 3,372 million USD by December 31, 2022. This represents a total reduction of approximately 22.8% from the 2020 high.
- Operational Earnings Analysis (EBIT and EBT)
- The trajectory of Earnings before interest and tax (EBIT) and Earnings before tax (EBT) closely mirrors that of EBITDA. EBIT peaked in 2020 at 3,830 million USD before declining to 2,827 million USD in 2022. The consistency in the gap between EBITDA and EBIT suggests that depreciation and amortization expenses remained relatively stable over the five-year duration, ranging from approximately 511 million USD to 556 million USD annually.
- Net Income Correlation
- Net income attributable to the company demonstrates the most significant proportional decline toward the end of the period. While it peaked in 2020 at 2,695 million USD, it dropped to 1,785 million USD by 2022. The rate of decline in net income was more severe than the decline in EBITDA, suggesting that the compression in operational earnings was exacerbated by increasing tax burdens, interest expenses, or other non-operating costs in the 2021 and 2022 fiscal years.
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Enterprise Value to EBITDA Ratio, Current
Colgate-Palmolive Co., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 70,910) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 3,372) |
| Valuation Ratio | |
| EV/EBITDA | 21.03 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Procter & Gamble Co. | 17.01 |
| EV/EBITDA, Industry | |
| Consumer Staples | 25.66 |
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
Colgate-Palmolive Co., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 68,823) | 73,300) | 73,870) | 72,618) | 63,413) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 3,372) | 3,760) | 4,369) | 4,012) | 4,168) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 20.41 | 19.49 | 16.91 | 18.10 | 15.21 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Procter & Gamble Co. | 17.48 | 17.56 | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Consumer Staples | 16.42 | 15.65 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 68,823 ÷ 3,372 = 20.41
4 Click competitor name to see calculations.
Between 2018 and 2022, a general expansion in the valuation multiple is evident, as the EV/EBITDA ratio rose from 15.21 to 20.41. This trend indicates that the market valuation of the entity has increased relative to its operational earnings performance over the five-year period.
- Enterprise Value (EV) Trends
- The Enterprise Value showed an initial upward trajectory, increasing from 63,413 million USD in 2018 to a peak of 73,870 million USD in 2020. This growth was followed by a period of gradual contraction, with the value receding to 68,823 million USD by December 31, 2022.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization displayed volatility throughout the period. After reaching a high of 4,369 million USD in 2020, a sustained downward trend occurred, with EBITDA falling to 3,760 million USD in 2021 and further decreasing to 3,372 million USD in 2022.
- EV/EBITDA Ratio Analysis
- The ratio exhibited an overall increase, despite the decline in Enterprise Value observed after 2020. The expansion of the multiple from 16.91 in 2020 to 20.41 in 2022 is primarily driven by the fact that EBITDA declined at a faster rate than the Enterprise Value. This divergence suggests a higher valuation premium being applied to lower operational earnings toward the end of the analyzed period.
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