FedEx Corp. (FDX)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

FedEx Corp., EBITDA calculation

USD $ in millions

12 months ended	May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
Net income	4,572	2,997	1,820	1,050	2,097	1,561
Add: Income tax expense	(219)	1,582	920	577	1,192	894
Earnings before tax (EBT)	4,353	4,579	2,740	1,627	3,289	2,455
Add: Interest expense	558	512	336	235	160	82
Earnings before interest and tax (EBIT)	4,911	5,091	3,076	1,862	3,449	2,537
Add: Depreciation and amortization	3,095	2,995	2,631	2,611	2,587	2,386
Earnings before interest, tax, depreciation and amortization (EBITDA)	8,006	8,086	5,707	4,473	6,036	4,923

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.	FedEx Corp.'s EBITDA increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

FedEx Corp., current EV/EBITDA calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)	71,557
Earnings before interest, tax, depreciation and amortization (EBITDA)	8,006
Ratio
EV/EBITDA	8.94
Benchmarks
EV/EBITDA, Competitors
CSX Corp.	14.33
Union Pacific Corp.	12.29
United Parcel Service Inc.	12.12
EV/EBITDA, Sector
Industrial Transportation	11.64
EV/EBITDA, Industry
Industrials	15.29

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.

FedEx Corp., historical EV/EBITDA calculation, comparison to benchmarks

	May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)¹	74,531	68,766	53,019	51,868	44,948	30,903
Earnings before interest, tax, depreciation and amortization (EBITDA)²	8,006	8,086	5,707	4,473	6,036	4,923
Ratio
EV/EBITDA³	9.31	8.50	9.29	11.60	7.45	6.28
Benchmarks
EV/EBITDA, Competitors
CSX Corp.	–	11.67	11.85	6.65	9.37	7.87
Union Pacific Corp.	–	10.98	10.74	7.42	10.85	9.48
United Parcel Service Inc.	–	11.18	13.60	9.83	14.37	10.54
EV/EBITDA, Sector
Industrial Transportation	–	10.54	11.43	8.73	10.74	8.99
EV/EBITDA, Industry
Industrials	–	15.26	13.29	11.89	11.61	11.16

2018 Calculations

³ EV/EBITDA = EV ÷ EBITDA
= 74,531 ÷ 8,006 = 9.31

Ratio	Description	The company
EV/EBITDA	EV/EBITDA is a valuation indicator for the overall company rather than common stock.	FedEx Corp.'s EV/EBITDA ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.