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FedEx Corp. (FDX)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

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

FedEx Corp., EBITDA calculation

USD $ in millions

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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 

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

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.

Enterprise Value to EBITDA Ratio, Current

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

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Selected Financial Data (USD $ in millions)
Enterprise value (EV) 60,436 
Earnings before interest, tax, depreciation and amortization (EBITDA) 8,006 
Ratio
EV/EBITDA 7.55
Benchmarks
EV/EBITDA, Competitors
CSX Corp. 11.71
Union Pacific Corp. 13.34
United Parcel Service Inc. 11.64
EV/EBITDA, Sector
Industrial Transportation 11.46
EV/EBITDA, Industry
Industrials 15.33

Based on: 10-K (filing date: 2018-07-16).

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

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

Microsoft Excel LibreOffice Calc
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. 11.03 11.67 11.85 6.65 9.37 –
Union Pacific Corp. 12.78 10.98 10.74 7.42 10.85 –
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 –
EV/EBITDA, Industry
Industrials – 15.26 13.29 11.89 11.61 –

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

1 See Details »

2 See Details »

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.