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Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


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

Pfizer Inc., EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income attributable to Pfizer Inc. 21,308  7,215  6,960  9,135  22,003 
Add: Net income attributable to noncontrolling interest 47  31  26  33  69 
Less: Discontinued operations, net of tax 17  11  49  10,662 
Add: Income tax expense (9,048) 1,122  1,990  3,121  4,306 
Earnings before tax (EBT) 12,305  8,351  8,965  12,240  15,716 
Add: Interest expense 1,270  1,186  1,199  1,360  1,414 
Earnings before interest and tax (EBIT) 13,575  9,537  10,164  13,600  17,130 
Add: Depreciation and amortization 6,269  5,757  5,157  5,537  6,410 
Earnings before interest, tax, depreciation and amortization (EBITDA) 19,844  15,294  15,321  19,137  23,540 
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. Pfizer Inc.'s EBITDA declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Enterprise Value to EBITDA Ratio, Current

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

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 270,604 
Earnings before interest, tax, depreciation and amortization (EBITDA) 19,844 
Ratio
EV/EBITDA 13.64
Benchmarks
EV/EBITDA, Competitors
Abbott Laboratories 21.45
AbbVie Inc. 17.07
Allergan PLC
Amgen Inc. 9.45
Biogen Inc. 11.11
Bristol-Myers Squibb Co. 16.45
Celgene Corp. 12.69
Eli Lilly & Co. 29.84
Gilead Sciences Inc. 6.44
Johnson & Johnson 15.55
Merck & Co. Inc. 16.77
Regeneron Pharmaceuticals Inc. 17.67
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 15.15
EV/EBITDA, Industry
Health Care 15.32

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

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 236,623  227,277  199,475  211,252  209,383 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 19,844  15,294  15,321  19,137  23,540 
Ratio
EV/EBITDA3 11.92 14.86 13.02 11.04 8.89
Benchmarks
EV/EBITDA, Competitors
Abbott Laboratories 20.08 25.22 12.40 17.78 13.30
AbbVie Inc. 20.80 12.73 13.50 29.11 13.16
Allergan PLC 20.95 59.52 59.49 74.17
Amgen Inc. 9.37 9.60 9.91 13.96 14.22
Biogen Inc. 11.68 9.99 11.42 19.47 23.30
Bristol-Myers Squibb Co. 17.25 14.26 39.09 32.88 24.30
Celgene Corp. 14.20 28.50 31.19 34.11 30.94
Eli Lilly & Co. 22.72 18.40 19.15 18.17 8.65
Gilead Sciences Inc. 7.11 5.57 5.56 9.70 27.58
Johnson & Johnson 15.04 13.07 11.54 10.63 12.36
Merck & Co. Inc. 13.74 17.75 12.35 6.96 13.26
Regeneron Pharmaceuticals Inc. 15.13 26.10 28.77 47.11 40.56
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 14.59 13.50 13.31 13.52 14.20
EV/EBITDA, Industry
Health Care 14.56 13.38 13.26 13.26 13.44

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 236,623 ÷ 19,844 = 11.92

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Pfizer Inc.'s EV/EBITDA ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017.