Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
General Dynamics Corp., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The financial trajectory from 2015 to 2019 is characterized by a period of stability followed by a marked acceleration in profitability. While earnings metrics experienced a slight contraction or plateau between 2016 and 2017, a strong upward trend emerged in the final two years of the period.
- EBITDA Growth and Operational Performance
- Earnings before interest, tax, depreciation and amortization (EBITDA) grew from 4,682 million USD in 2015 to 5,503 million USD in 2019. A temporary decline occurred in 2017, where EBITDA fell to 4,635 million USD, but this was followed by a significant recovery. The most substantial growth occurred between 2017 and 2019, representing a cumulative increase of approximately 18.7% over those two years.
- Operating Income and EBIT Trends
- Earnings before interest and tax (EBIT) followed a pattern nearly identical to EBITDA, moving from 4,200 million USD in 2015 to 4,674 million USD in 2019. The consistency between EBIT and EBITDA growth suggests that depreciation and amortization expenses remained relatively stable as a proportion of operating results throughout the five-year period.
- Earnings before Tax (EBT) Stability
- Earnings before tax exhibited the least volatility of all analyzed metrics. EBT began at 4,102 million USD in 2015 and ended at 4,202 million USD in 2019. The narrow range of fluctuation in EBT, contrasted with the higher growth in EBIT, suggests an increase in interest expenses or other non-operating costs that partially offset the gains in operational efficiency.
- Net Earnings Acceleration
- Net earnings remained stagnant between 2015 and 2017, fluctuating slightly around the 2,900 million USD level. However, a sharp increase was recorded starting in 2018, with net earnings rising to 3,345 million USD, and continuing to 3,484 million USD in 2019. This indicates a significant improvement in the conversion of operating profit to bottom-line net income during the latter part of the period.
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Enterprise Value to EBITDA Ratio, Current
General Dynamics Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 49,032) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 5,503) |
| Valuation Ratio | |
| EV/EBITDA | 8.91 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | 24.63 |
| Caterpillar Inc. | 28.51 |
| Eaton Corp. plc | 29.13 |
| GE Aerospace | 28.82 |
| Honeywell International Inc. | 10.98 |
| Lockheed Martin Corp. | 15.75 |
| RTX Corp. | 19.24 |
Based on: 10-K (reporting date: 2019-12-31).
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
General Dynamics Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 64,971) | 61,457) | 63,216) | 56,968) | 41,768) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 5,503) | 5,222) | 4,635) | 4,784) | 4,682) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 11.81 | 11.77 | 13.64 | 11.91 | 8.92 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
3 2019 Calculation
EV/EBITDA = EV ÷ EBITDA
= 64,971 ÷ 5,503 = 11.81
4 Click competitor name to see calculations.
Between 2015 and 2019, the financial metrics exhibit a period of initial valuation expansion followed by a phase of stabilization. The overall trajectory is characterized by a significant increase in the total market value of the entity relative to its operational cash flow generation.
- Enterprise Value Trends
- Enterprise Value experienced a marked increase from 41,768 million US$ in 2015 to 64,971 million US$ by 2019. The most substantial growth occurred between 2015 and 2017, with a minor contraction in 2018 before returning to an upward trajectory in 2019.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization remained relatively stagnant between 2015 and 2017, fluctuating within a narrow range between 4,635 million US$ and 4,784 million US$. A clear growth trend emerged in the latter two years, with EBITDA rising to 5,222 million US$ in 2018 and reaching 5,503 million US$ by the end of 2019.
- EV/EBITDA Multiple Analysis
- The valuation multiple rose sharply from 8.92 in 2015 to a peak of 13.64 in 2017. This expansion indicates a period where Enterprise Value grew at a rate that significantly outpaced EBITDA growth. Following this peak, the ratio corrected and stabilized, ending the period at 11.81 in 2019, suggesting a realignment between market valuation and actual operational earnings.
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