Raytheon Co. (RTN)

Enterprise Value to EBITDA (EV/EBITDA)

Intermediate level

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
EV to EBITDA Ratio, Current
EV to EBITDA Ratio, Historical

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

Raytheon Co., EBITDA calculation

US$ in millions

12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Net income attributable to Raytheon Company	2,909	2,024	2,211	2,074	2,244
Add: Net income attributable to noncontrolling interest	(27)	(23)	(37)	(7)	14
Less: Income (loss) from discontinued operations, net of tax	(1)	2	1	13	65
Add: Income tax expense	264	1,114	857	733	790
Earnings before tax (EBT)	3,147	3,113	3,030	2,787	2,983
Add: Interest expense	184	205	232	233	213
Earnings before interest and tax (EBIT)	3,331	3,318	3,262	3,020	3,196
Add: Depreciation and amortization	568	550	515	489	439
Earnings before interest, tax, depreciation and amortization (EBITDA)	3,899	3,868	3,777	3,509	3,635

Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).

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.	Raytheon Co.’s EBITDA increased from 2016 to 2017 and from 2017 to 2018.

Enterprise Value to EBITDA Ratio, Current

Raytheon Co., current EV/EBITDA calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	65,842
Earnings before interest, tax, depreciation and amortization (EBITDA)	3,899
Valuation Ratio
EV/EBITDA	16.89
Benchmarks
EV/EBITDA, Competitors¹
Boeing Co.	13.21
General Dynamics Corp.	12.45
Lockheed Martin Corp.	17.66
Northrop Grumman Corp.	15.11
United Technologies Corp.	14.56
EV/EBITDA, Sector
Aerospace & Defense	14.67
EV/EBITDA, Industry
Industrials	16.39

Based on: 10-K (filing date: 2019-02-13).

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

Raytheon Co., 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	52,515	62,981	46,438	40,176	33,737
Earnings before interest, tax, depreciation and amortization (EBITDA)²	3,899	3,868	3,777	3,509	3,635
Valuation Ratio
EV/EBITDA³	13.47	16.28	12.29	11.45	9.28
Benchmarks
EV/EBITDA, Competitors⁴
Boeing Co.	16.52	16.31	12.89	8.11	10.70
General Dynamics Corp.	11.77	13.64	11.91	8.92	10.21
Lockheed Martin Corp.	12.86	15.32	12.94	12.38	9.96
Northrop Grumman Corp.	11.68	16.21	12.12	10.78	9.14
United Technologies Corp.	12.19	11.02	10.44	9.23	10.50
EV/EBITDA, Sector
Aerospace & Defense	13.58	14.50	11.96	9.83	—
EV/EBITDA, Industry
Industrials	15.02	15.26	13.29	11.89	—

Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).

¹ See details »

² See details »

³ 2018 Calculation
EV/EBITDA = EV ÷ EBITDA
= 52,515 ÷ 3,899 = 13.47

⁴ Click competitor name to see calculations.

Valuation ratio	Description	The company
EV/EBITDA	Enterprise value to earnings before interest, tax, depreciation and amortization is a valuation indicator for the overall company rather than common stock.	Raytheon Co.’s EV/EBITDA ratio increased from 2016 to 2017 but then slightly decreased from 2017 to 2018 not reaching 2016 level.