Microsoft Excel LibreOffice Calc

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


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

Emerson Electric Co., EBITDA calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014 Sep 30, 2013 Sep 30, 2012
Net earnings common stockholders 1,518  1,635  2,710  2,147  2,004  1,968 
Add: Net income attributable to noncontrolling interest 32  29  23  37  62  56 
Less: Discontinued operations, net of tax (125) 45 
Add: Income tax expense 660  697  1,428  1,164  1,130  1,091 
Earnings before tax (EBT) 2,335  2,316  4,161  3,348  3,196  3,115 
Add: Interest expense 201  215  200  218  234  241 
Earnings before interest and tax (EBIT) 2,536  2,531  4,361  3,566  3,430  3,356 
Add: Depreciation and amortization 636  568  815  831  819  823 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,172  3,099  5,176  4,397  4,249  4,179 
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. Emerson Electric Co.'s EBITDA declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

Enterprise Value to EBITDA Ratio, Current

Emerson Electric Co., current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 47,876 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,172 
Ratio
EV/EBITDA 15.09
Benchmarks
EV/EBITDA, Industry
Industrials 15.10

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

Emerson Electric Co., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014 Sep 30, 2013 Sep 30, 2012
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 40,322  38,847  36,569  47,420  49,919  38,187 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 3,172  3,099  5,176  4,397  4,249  4,179 
Ratio
EV/EBITDA3 12.71 12.54 7.07 10.78 11.75 9.14
Benchmarks
EV/EBITDA, Industry
Industrials 15.31 14.10 13.06 11.22 10.57

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 40,322 ÷ 3,172 = 12.71

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Emerson Electric Co.'s EV/EBITDA ratio increased from 2015 to 2016 and from 2016 to 2017.