Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
National Oilwell Varco Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
Financial performance between 2011 and 2014 was characterized by consistent growth across all earnings metrics, followed by a severe and abrupt contraction in 2015.
- Growth Phase Analysis (2011–2014)
- From 2011 to 2014, Earnings before interest, tax, depreciation and amortization (EBITDA) demonstrated a steady upward trend, rising from 3,517 million USD to a peak of 4,377 million USD. This period of expansion was mirrored in Net Income, which grew from 1,994 million USD in 2011 to 2,502 million USD in 2014, indicating a sustained period of operational profitability and increasing scale.
- Operational Collapse in 2015
- A significant downturn occurred in 2015, during which EBITDA plummeted to 261 million USD, representing a decline of approximately 94% from the previous year. The impact was more pronounced in the lower-line earnings; Earnings before interest and tax (EBIT) and Earnings before tax (EBT) transitioned from multi-billion dollar surpluses to losses of 486 million USD and 589 million USD, respectively. Net income shifted to a loss of 769 million USD, signaling a total reversal of the previous four-year growth trend.
- Analysis of Non-Cash Impact
- The divergence between EBITDA and EBIT in 2015 is noteworthy. While EBITDA remained nominally positive at 261 million USD, the EBIT was negative at 486 million USD. This indicates that while the company maintained a minimal positive result before accounting for non-cash charges, the burden of depreciation and amortization was substantial enough to push operational earnings into a deficit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Enterprise Value to EBITDA Ratio, Current
National Oilwell Varco Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 14,260) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 261) |
| Valuation Ratio | |
| EV/EBITDA | 54.64 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| SLB N.V. | 10.93 |
Based on: 10-K (reporting date: 2015-12-31).
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
National Oilwell Varco Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 12,938) | 22,310) | 32,562) | 29,001) | 33,665) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 261) | 4,377) | 4,212) | 4,182) | 3,517) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 49.57 | 5.10 | 7.73 | 6.93 | 9.57 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
3 2015 Calculation
EV/EBITDA = EV ÷ EBITDA
= 12,938 ÷ 261 = 49.57
4 Click competitor name to see calculations.
Between 2011 and 2015, the financial metrics exhibit a period of relative stability followed by a severe operational contraction. The relationship between enterprise value and earnings before interest, tax, depreciation, and amortization underwent a fundamental shift in the final year of the period analyzed.
- Enterprise Value Trends
- The enterprise value showed a general downward trajectory over the five-year period, decreasing from $33,665 million in 2011 to $12,938 million in 2015. While there was a temporary recovery in 2013, a sharp decline occurred between 2014 and 2015, reflecting a significant reduction in the overall market valuation of the entity.
- EBITDA Performance
- Operational earnings demonstrated consistent growth from 2011 through 2014, rising from $3,517 million to a peak of $4,377 million. This upward trend was abruptly reversed in 2015, where EBITDA collapsed to $261 million, indicating a critical decline in operational profitability.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio remained within a moderate range of 5.10 to 9.57 between 2011 and 2014, suggesting a stable valuation relative to earnings. In 2015, the ratio spiked to 49.57. This surge was not the result of an increase in enterprise value, but rather a consequence of the drastic fall in EBITDA, which mathematically inflated the multiple.
The data indicates that while the organization maintained healthy earnings growth for several years, the 2015 fiscal year experienced a systemic shock that severely decoupled the enterprise value from its operational earning capacity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?