Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Halliburton Co., EBITDA calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2014-12-31).
The financial performance from 2014 to 2018 is characterized by a severe contraction followed by a progressive recovery. A significant volatility pattern is evident across all earnings metrics, with 2016 representing the nadir of the analyzed period.
- EBITDA Performance and Volatility
- Earnings before interest, tax, depreciation and amortization experienced a precipitous decline from a peak of 7,234 million US$ in 2014 to a deficit of 5,424 million US$ in 2016. This represents a substantial erosion of operational cash-flow potential. However, a recovery trend commenced in 2017, with EBITDA returning to 2,943 million US$, and further increasing to 4,018 million US$ by 2018.
- Net Income and Profitability Thresholds
- Net income exhibited higher sensitivity to the downturn than EBITDA. While the company remained EBITDA-positive in 2015, net income shifted to a loss of 671 million US$ in that same year. Losses peaked in 2016 at 5,763 million US$. Positive net income was not restored until 2018, reaching 1,656 million US$, which remains significantly below the 2014 level of 3,500 million US$.
- Operating Earnings Trajectory (EBIT and EBT)
- Earnings before interest and tax (EBIT) and Earnings before tax (EBT) mirrored the trajectory of EBITDA but stayed in negative territory for a longer duration. Both metrics shifted from strong positives in 2014 to deep negatives in 2016, with EBIT reaching -6,927 million US$. The transition back to positive EBIT and EBT occurred in 2017, indicating that operational earnings recovered prior to the bottom-line net income returning to profitability in 2018.
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Enterprise Value to EBITDA Ratio, Current
Halliburton Co., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 35,869) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,018) |
| Valuation Ratio | |
| EV/EBITDA | 8.93 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| SLB N.V. | 10.93 |
Based on: 10-K (reporting date: 2018-12-31).
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
Halliburton Co., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 35,869) | 49,490) | 55,991) | 32,211) | 42,232) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,018) | 2,943) | (5,424) | 1,362) | 7,234) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 8.93 | 16.82 | — | 23.65 | 5.84 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
3 2018 Calculation
EV/EBITDA = EV ÷ EBITDA
= 35,869 ÷ 4,018 = 8.93
4 Click competitor name to see calculations.
The financial performance from 2014 to 2018 was characterized by extreme volatility in operational earnings and fluctuating enterprise valuations, resulting in significant instability in the EV/EBITDA multiple.
- Enterprise Value (EV) Trends
- Enterprise value exhibited a non-linear trajectory, starting at 42,232 million USD in 2014 and decreasing to 32,211 million USD in 2015. A sharp increase occurred in 2016, reaching a peak of 55,991 million USD, followed by a consistent two-year decline to 35,869 million USD by the end of 2018.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization underwent a severe contraction during the analyzed period. After a strong start of 7,234 million USD in 2014, EBITDA plummeted to 1,362 million USD in 2015 and fell into negative territory in 2016, reaching -5,424 million USD. A recovery phase began in 2017 with 2,943 million USD and continued into 2018, ending at 4,018 million USD.
- EV/EBITDA Ratio Analysis
- The EV/EBITDA ratio experienced extreme expansion as a result of the collapsing EBITDA. The ratio rose from a modest 5.84 in 2014 to 23.65 in 2015. In 2016, the ratio was not applicable due to negative EBITDA. Following the return to profitability, the ratio began to compress, falling from 16.82 in 2017 to 8.93 in 2018, indicating a trend toward valuation normalization as operational earnings recovered and enterprise value moderated.
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