Enterprise Value to EBITDA (EV/EBITDA)
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Illinois Tool Works Inc. pages available for free this week:
- Common-Size Income Statement
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Illinois Tool Works Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial data over the five-year period reveals several notable trends in the profitability metrics.
- Net Income
- The net income showed a significant increase from 2017 to 2018, rising from 1,687 million USD to 2,563 million USD. This was followed by a slight decline in 2019 to 2,521 million USD and a more pronounced decrease in 2020 to 2,109 million USD. However, net income rebounded strongly in 2021, reaching 2,694 million USD, the highest in the period observed.
- Earnings Before Tax (EBT)
- EBT demonstrated relative stability with a moderate increase from 3,270 million USD in 2017 to 3,394 million USD in 2018, but it declined to 3,288 million USD in 2019. In 2020, EBT experienced a more substantial drop to 2,704 million USD, but it recovered to 3,326 million USD in 2021, again nearing the earlier peak levels.
- Earnings Before Interest and Tax (EBIT)
- The EBIT trend closely mirrors that of EBT, increasing from 3,530 million USD in 2017 to 3,651 million USD in 2018, then falling to 3,509 million USD in 2019. A sharper decline occurred in 2020, with EBIT dropping to 2,910 million USD. In 2021, EBIT recovered to 3,528 million USD, approaching the values recorded in 2017 and 2018.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA shows a similar pattern, increasing from 3,786 million USD in 2017 to 3,923 million USD in 2018, then declining slightly to 3,776 million USD in 2019. A significant decrease is observed in 2020 with EBITDA falling to 3,183 million USD. The measure rebounded in 2021 to 3,805 million USD, nearing the levels prior to the decrease.
Overall, the data indicates a period of growth in 2018 across all profitability measures, followed by a decline in 2019 and a more considerable contraction in 2020, likely reflecting challenging operating conditions during that year. The consistent recovery in 2021 across all metrics suggests a rebound in operational profitability and financial health. The fluctuations between 2017 and 2021 highlight the company's sensitivity to external factors impacting earnings but also its capacity to recover strongly.
Enterprise Value to EBITDA Ratio, Current
Illinois Tool Works Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | |
| Valuation Ratio | |
| EV/EBITDA | |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | |
| Caterpillar Inc. | |
| Eaton Corp. plc | |
| GE Aerospace | |
| Honeywell International Inc. | |
| Lockheed Martin Corp. | |
| RTX Corp. | |
| EV/EBITDA, Sector | |
| Capital Goods | |
| EV/EBITDA, Industry | |
| Industrials | |
Based on: 10-K (reporting date: 2021-12-31).
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
Illinois Tool Works Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | ||||||
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | ||||||
| Valuation Ratio | ||||||
| EV/EBITDA3 | ||||||
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| EV/EBITDA, Sector | ||||||
| Capital Goods | ||||||
| EV/EBITDA, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/EBITDA = EV ÷ EBITDA
= ÷ =
4 Click competitor name to see calculations.
The analyzed financial data reveals several notable trends over the five-year period ending December 31, 2021.
- Enterprise Value (EV)
- The enterprise value exhibited some volatility. It decreased from 61,033 million US dollars at the end of 2017 to 53,197 million US dollars by the end of 2018, representing a notable reduction. Subsequently, the EV increased significantly to 65,683 million in 2019, followed by a continued upward trend reaching 69,202 million in 2020 and 74,291 million at the end of 2021. Overall, this indicates recovery and growth in market valuation after an initial dip.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA values demonstrated fluctuations, starting at 3,786 million US dollars in 2017 and increasing modestly to 3,923 million in 2018. Thereafter, EBITDA declined to 3,776 million in 2019, followed by a more pronounced drop to 3,183 million in 2020. This decline suggests operational challenges possibly related to external economic conditions. However, EBITDA rebounded to 3,805 million in 2021, nearing the levels observed in 2017 and 2018.
- EV/EBITDA Ratio
- The EV/EBITDA ratio exhibited variability consistent with changes in both EV and EBITDA. The ratio decreased from 16.12 in 2017 to 13.56 in 2018, reflecting the decrease in enterprise value and slight increase in EBITDA. In 2019, the ratio rose sharply to 17.39, driven by an increase in EV and a decrease in EBITDA. The highest ratio was observed in 2020 at 21.74, coinciding with the lowest EBITDA and a continuing increase in EV, indicating potentially elevated valuation multiples relative to earnings. By 2021, the ratio moderated to 19.52 as EBITDA improved, yet it remained elevated compared to earlier years.
Overall, the data reveals an enterprise value that experienced initial contraction followed by steady growth, while EBITDA showed signs of stress in 2019 and 2020 before recovering in 2021. The EV/EBITDA ratio peaked during periods of reduced earnings, suggesting valuation sensitivity to earnings fluctuations. The trends highlight resilience and recovery in operational performance after temporary declines.