Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Devon Energy 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), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial performance of Devon Energy Corp. between 2018 and 2022 is characterized by significant volatility, featuring a severe contraction followed by an exponential recovery in operational profitability.
- EBITDA Performance and Trend Analysis
- Earnings before interest, tax, depreciation and amortization exhibited a declining trend from 2018 to 2020, falling from US$ 2,876 million to a deficit of US$ 1,531 million. This downward trajectory culminated in a critical low in 2020. A sharp reversal occurred in 2021, with EBITDA rising to US$ 5,444 million, and further accelerating to US$ 10,368 million by the end of 2022. This represents a substantial increase in cash flow generation capabilities over the final two years of the period.
- Correlation Between Operational and Net Earnings
- A strong positive correlation is observed between EBITDA and net earnings. Both metrics experienced negative values in 2020, with net earnings reaching a loss of US$ 2,680 million. The recovery in net earnings mirrored the EBITDA surge, growing from US$ 2,813 million in 2021 to US$ 6,015 million in 2022. The gap between EBITDA and EBIT remains consistent throughout the period, reflecting the ongoing impact of depreciation and amortization on operating results.
- Profitability Scaling and Recovery Magnitude
- The magnitude of the recovery from 2020 to 2022 is substantial. EBITDA transitioned from a loss of US$ 1,531 million to a gain of US$ 10,368 million, indicating a total swing of approximately US$ 11.9 billion. Similarly, Earnings before interest and tax (EBIT) moved from a deficit of US$ 2,831 million in 2020 to a surplus of US$ 8,145 million in 2022, underscoring a robust restoration of operational profitability.
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Enterprise Value to EBITDA Ratio, Current
Devon Energy Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 33,678) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 10,368) |
| Valuation Ratio | |
| EV/EBITDA | 3.25 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Chevron Corp. | 11.22 |
| ConocoPhillips | 7.16 |
| ExxonMobil Holdings Corp. | 10.53 |
| EV/EBITDA, Sector | |
| Oil, Gas & Consumable Fuels | 6.27 |
| EV/EBITDA, Industry | |
| Energy | 6.46 |
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
Devon Energy Corp., 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 | 42,800) | 40,370) | 17,073) | 11,514) | 16,800) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 10,368) | 5,444) | (1,531) | 1,648) | 2,876) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 4.13 | 7.42 | — | 6.99 | 5.84 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Chevron Corp. | 4.74 | 7.18 | — | — | — | |
| ConocoPhillips | 3.82 | 6.34 | — | — | — | |
| ExxonMobil Holdings Corp. | 4.54 | 7.07 | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Oil, Gas & Consumable Fuels | 4.47 | 6.97 | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Energy | 4.75 | 7.24 | — | — | — | |
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
= 42,800 ÷ 10,368 = 4.13
4 Click competitor name to see calculations.
The financial data reveals a period of significant volatility in both valuation and operational earnings, characterized by a sharp contraction in 2020 followed by a substantial recovery and growth phase through 2022.
- Enterprise Value Trends
- Enterprise value experienced a decline in 2019 to 11,514 million before entering a period of rapid expansion. A notable surge occurred between 2020 and 2021, where the value more than doubled, eventually reaching a peak of 42,800 million by the end of 2022.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization exhibited extreme fluctuations. After a decrease in 2019, EBITDA fell into negative territory in 2020, recording a loss of 1,531 million. This was followed by a strong recovery in 2021 and a further acceleration in 2022, where EBITDA reached 10,368 million, representing a significant increase in operational profitability.
- EV/EBITDA Ratio Analysis
- The EV/EBITDA ratio trended upward from 5.84 in 2018 to 7.42 in 2021, reflecting an increase in valuation relative to earnings during the recovery phase. In 2020, the ratio was not applicable due to negative EBITDA. By 2022, the ratio contracted sharply to 4.13, the lowest point in the five-year series. This decline indicates that the growth in EBITDA significantly outpaced the growth in enterprise value, resulting in a lower valuation multiple.
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