Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
LyondellBasell Industries N.V., 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 profitability metrics for the period between 2014 and 2018 exhibit a cyclical trend, characterized by a peak in 2015, a contraction in 2016, and a partial recovery through 2018. Earnings before interest, tax, depreciation and amortization (EBITDA) consistently represents the highest value across all earnings tiers, serving as a primary indicator of operational performance before the impact of capital structure and non-cash charges.
- EBITDA Performance Trends
- EBITDA grew from 7,083 million US$ in 2014 to a peak of 7,566 million US$ in 2015. This was followed by a notable decline in 2016 to 6,619 million US$, a reduction of approximately 12.5% from the previous year. A recovery occurred in 2017, with EBITDA rising to 7,158 million US$, before softening slightly to 6,912 million US$ in 2018.
- Depreciation and Amortization Analysis
- An analysis of the variance between EBITDA and EBIT reveals a steady increase in depreciation and amortization expenses. The difference rose from 1,019 million US$ in 2014 to 1,241 million US$ in 2018. This consistent upward trend suggests an expanding asset base or increased capital investment over the five-year duration.
- Comparative Earnings Volatility
- Net income attributable to shareholders generally aligns with the directional movements of EBITDA, although it exhibits different peak timing. While EBITDA peaked in 2015, net income reached its highest point in 2017 at 4,879 million US$. The synchronized decline across Net Income, EBT, EBIT, and EBITDA in 2016 indicates a period of broad operational headwinds that impacted all levels of the income statement.
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Enterprise Value to EBITDA Ratio, Current
LyondellBasell Industries N.V., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 33,643) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 6,912) |
| Valuation Ratio | |
| EV/EBITDA | 4.87 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Linde plc | 18.10 |
| Sherwin-Williams Co. | 20.26 |
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
LyondellBasell Industries N.V., 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 | 40,964) | 49,514) | 44,380) | 39,738) | 47,425) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 6,912) | 7,158) | 6,619) | 7,566) | 7,083) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 5.93 | 6.92 | 6.70 | 5.25 | 6.70 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Linde plc | — | — | — | — | — | |
| Sherwin-Williams Co. | — | — | — | — | — | |
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
= 40,964 ÷ 6,912 = 5.93
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA (EV/EBITDA) ratio for the period between 2014 and 2018 exhibits moderate volatility, reflecting fluctuations in the market valuation relative to operational cash flow. While EBITDA remained comparatively stable, the Enterprise Value experienced more significant shifts, which served as the primary driver for the changes in the valuation multiple.
- Enterprise Value Trends
- Enterprise Value demonstrated a non-linear trend, starting at 47,425 million in 2014, decreasing to 39,738 million in 2015, and subsequently rising to a peak of 49,514 million in 2017. A subsequent correction occurred in 2018, with the value falling to 40,964 million.
- EBITDA Performance
- Operational earnings remained relatively consistent, fluctuating within a range of 6,619 million to 7,566 million. The peak EBITDA was recorded in 2015, while the lowest point occurred in 2016, indicating a stable capacity for earnings before interest, tax, depreciation, and amortization.
- EV/EBITDA Ratio Analysis
- The valuation multiple fluctuated between a low of 5.25 in 2015 and a high of 6.92 in 2017. The dip in 2015 was driven by a combination of lower Enterprise Value and higher EBITDA. The peak in 2017 resulted from the highest recorded Enterprise Value during the period. By 2018, the ratio contracted to 5.93, reflecting a decline in market valuation that outweighed the slight decrease in EBITDA.
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