Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Kinder Morgan Inc., 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).
An analysis of the financial performance between 2015 and 2019 reveals a consistent and sustained upward trend in core operational profitability. The growth is most evident in the operational earnings metrics, which demonstrate linear expansion over the five-year period.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA exhibited steady annual growth, increasing from US$ 5,132 million in 2015 to US$ 7,377 million in 2019. This consistent trajectory indicates a strengthening of the primary operational cash-generating capacity of the business, independent of capital structure and non-cash accounting charges.
- Operating and Pre-Tax Earnings (EBIT and EBT)
- Earnings before interest and tax (EBIT) and earnings before tax (EBT) mirrored the growth pattern of EBITDA. EBIT rose from US$ 2,823 million in 2015 to US$ 4,966 million in 2019, while EBT increased from US$ 772 million to US$ 3,165 million. The parallel growth across these three metrics suggests that the increase in profitability was driven by fundamental operational improvements rather than one-time gains.
- Net Income Correlation
- A divergence is observed when comparing operational earnings to net income. While EBITDA and EBIT grew linearly, net income experienced significant volatility, characterized by a sharp decline in 2017 to US$ 183 million before surging to US$ 2,190 million by 2019. This volatility indicates that while core operations remained stable and growing, the final net profit was subject to substantial influence from non-operating expenses, tax adjustments, or other non-recurring items.
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Enterprise Value to EBITDA Ratio, Current
Kinder Morgan Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 69,130) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 7,377) |
| Valuation Ratio | |
| EV/EBITDA | 9.37 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Chevron Corp. | 11.22 |
| ConocoPhillips | 7.16 |
| ExxonMobil Holdings Corp. | 10.53 |
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
Kinder Morgan Inc., 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 | 83,003) | 75,637) | 77,038) | 89,819) | 78,079) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 7,377) | 6,720) | 6,254) | 5,653) | 5,132) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 11.25 | 11.26 | 12.32 | 15.89 | 15.21 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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
= 83,003 ÷ 7,377 = 11.25
4 Click competitor name to see calculations.
Between 2015 and 2019, a clear trend of valuation multiple compression is evident, driven primarily by steady operational growth despite fluctuations in the overall enterprise value.
- EBITDA Growth Performance
- Earnings before interest, tax, depreciation and amortization (EBITDA) demonstrated consistent year-over-year growth throughout the analyzed period. Starting at 5,132 million US dollars in 2015, the figure rose steadily to 7,377 million US dollars by 2019, representing a sustained increase in operational profitability.
- Enterprise Value Volatility
- The enterprise value (EV) exhibited a non-linear progression, peaking at 89,819 million US dollars in 2016 before contracting to a low of 75,637 million US dollars in 2018. A recovery was observed in 2019, with the value increasing to 83,003 million US dollars.
- EV/EBITDA Ratio Compression
- The EV/EBITDA ratio experienced a significant downward trajectory over the five-year horizon. After reaching a peak of 15.89 in 2016, the ratio declined to 12.32 in 2017 and further stabilized at 11.26 in 2018 and 11.25 in 2019. This compression indicates that the growth in EBITDA outpaced the changes in enterprise value, resulting in a lower valuation multiple relative to the company's earnings power by the end of the period.
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