Enterprise Value to EBITDA (EV/EBITDA)
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National Oilwell Varco Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
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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).
- Net Income (Loss) Attributable to Company
- The net income demonstrated a generally positive trend from 2011 through 2014, increasing from 1,994 million US dollars in 2011 to a peak of 2,502 million US dollars in 2014. However, in 2015, there was a significant reversal, resulting in a net loss of 769 million US dollars. This indicates a substantial deterioration in profitability during the final year of the period analyzed.
- Earnings Before Tax (EBT)
- The earnings before tax followed a similar upward trend from 2011 to 2014, rising from 2,922 million US dollars to 3,494 million US dollars. The 2015 figure showed a marked decline, with earnings falling to a negative 589 million US dollars. This reflects considerable pre-tax earnings volatility and a notable decline in profitability in 2015.
- Earnings Before Interest and Tax (EBIT)
- EBIT increased steadily over the first four years, from 2,962 million US dollars in 2011 to 3,599 million US dollars in 2014. This earnings measure also showed a pronounced drop in 2015, declining to a negative 486 million US dollars. The continuous positive trend across 2011 to 2014 suggests operational efficiency improvements, but the 2015 decrease signals operational challenges.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA exhibited consistent growth from 2011 to 2014, increasing from 3,517 million US dollars to 4,377 million US dollars. Nonetheless, 2015 saw a drastic reduction to 261 million US dollars, representing a significant contraction in earnings before non-cash expenses. This sharp decline could imply operational disruptions or external factors adversely impacting cash earnings.
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) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | |
| Valuation Ratio | |
| EV/EBITDA | |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Schlumberger Ltd. | |
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 | ||||||
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | ||||||
| Valuation Ratio | ||||||
| EV/EBITDA3 | ||||||
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value experienced a decreasing trend over the period. Starting at US$33,665 million at the end of 2011, it declined consistently to US$12,938 million by the end of 2015. This represents a significant reduction, with the most notable decreases occurring between 2013 and 2014, and continuing sharply into 2015.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA showed growth from 2011 through 2014. It increased from US$3,517 million in 2011 to a peak of US$4,377 million in 2014, indicating improving operational profitability during this period. However, a dramatic decline occurred in 2015, where EBITDA dropped sharply to US$261 million, indicating significant operational challenges or non-recurring impacts affecting earnings.
- EV/EBITDA Ratio
- The EV/EBITDA ratio fluctuated substantially throughout the period. From a relatively high 9.57 in 2011, it declined to a low of 5.10 in 2014, suggesting improving valuation attractiveness relative to earnings. However, in 2015, this ratio spiked dramatically to 49.57, a reflection of the drastic fall in EBITDA combined with the still considerable enterprise value. This indicates a significant deterioration in earnings relative to the firm's valuation and may imply increased risk or market concerns about future performance.
- Summary of Trends
- Overall, the company showed operational earnings growth and declining enterprise value until 2014, which resulted in improvements in valuation multiples. The year 2015 marked a stark reversal with a severe drop in EBITDA, a continuing decline in enterprise value, and a sharply increased EV/EBITDA ratio, highlighting significant financial stress or market challenges impacting the company's performance and valuation.