Microsoft Excel LibreOffice Calc

Nike Inc. (NKE)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Nike Inc., EBITDA calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Net income 1,933  4,240  3,760  3,273  2,693  2,485 
Less: Net income from discontinued operations –  –  –  –  –  21 
Add: Income tax expense 2,392  646  863  932  851  808 
Earnings before tax (EBT) 4,325  4,886  4,623  4,205  3,544  3,272 
Add: Interest expense 124  86  31  34  38  23 
Earnings before interest and tax (EBIT) 4,449  4,972  4,654  4,239  3,582  3,295 
Add: Depreciation 747  706  649  606  518  438 
Add: Amortization and other 27  10  13  43  114  75 
Earnings before interest, tax, depreciation and amortization (EBITDA) 5,223  5,688  5,316  4,888  4,214  3,808 

Based on: 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25), 10-K (filing date: 2013-07-23).

Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Nike Inc.'s EBITDA increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Enterprise Value to EBITDA Ratio, Current

Nike Inc., current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 109,574 
Earnings before interest, tax, depreciation and amortization (EBITDA) 5,223 
Ratio
EV/EBITDA 20.98
Benchmarks
EV/EBITDA, Competitors
Colgate-Palmolive Co. 14.56
Kimberly-Clark Corp. 11.26
EV/EBITDA, Sector
Personal Goods 15.43
EV/EBITDA, Industry
Consumer Goods 11.62

Based on: 10-K (filing date: 2018-07-25).

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.

Enterprise Value to EBITDA Ratio, Historical

Nike Inc., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 122,064  94,736  92,205  92,846  63,715  51,693 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 5,223  5,688  5,316  4,888  4,214  3,808 
Ratio
EV/EBITDA3 23.37 16.66 17.34 18.99 15.12 13.57
Benchmarks
EV/EBITDA, Competitors
Colgate-Palmolive Co. – 16.45 16.44 19.69 16.81 14.99
Kimberly-Clark Corp. – 11.18 12.16 20.99 13.32 10.90
EV/EBITDA, Sector
Personal Goods – 14.97 15.50 19.68 15.17 13.11
EV/EBITDA, Industry
Consumer Goods – 12.30 11.84 12.68 13.08 10.91

Based on: 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25), 10-K (filing date: 2013-07-23).

1 See Details »

2 See Details »

2018 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 122,064 ÷ 5,223 = 23.37

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Nike Inc.'s EV/EBITDA ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.