Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Raytheon Co., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The financial metrics demonstrate a consistent upward trajectory in operational profitability from 2015 through 2019. All analyzed earnings tiers, including EBITDA, EBIT, EBT, and net income, show overall growth, with a notable acceleration in performance during the final year of the observed period.
- EBITDA Growth Analysis
- Earnings before interest, tax, depreciation and amortization increased steadily from US$ 3,509 million in 2015 to US$ 3,899 million in 2018. A significant expansion was recorded in 2019, with EBITDA rising to US$ 4,771 million, representing an approximate 22.3% increase over the prior year. This trend indicates a substantial strengthening of core operational cash flow generation toward the end of the five-year sequence.
- Depreciation and Amortization Trends
- The spread between EBITDA and EBIT reveals a gradual and consistent increase in depreciation and amortization expenses. This variance grew from US$ 489 million in 2015 to US$ 605 million in 2019. The steady rise in these non-cash charges suggests a sustained expansion of the company's asset base or ongoing capital expenditures throughout the period.
- Net Income and Operational Divergence
- While EBITDA and EBIT maintained uninterrupted year-over-year growth, net income attributable to the company exhibited a temporary contraction in 2017, falling to US$ 2,024 million from US$ 2,211 million in 2016. Because EBITDA continued to rise during the same interval, this suggests that the 2017 decline in net income was driven by factors outside of core operations, such as increased tax burdens or non-operating expenses. Subsequent growth in net income to US$ 3,343 million by 2019 aligns with the broader positive trend in operational earnings.
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Enterprise Value to EBITDA Ratio, Current
Raytheon Co., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 64,443) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,771) |
| Valuation Ratio | |
| EV/EBITDA | 13.51 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | 21.31 |
| Caterpillar Inc. | 25.06 |
| Eaton Corp. plc | 26.17 |
| GE Aerospace | 26.49 |
| Honeywell International Inc. | 11.25 |
| Lockheed Martin Corp. | 18.68 |
| RTX Corp. | 19.84 |
Based on: 10-K (reporting date: 2019-12-31).
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
Raytheon Co., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 64,443) | 52,515) | 62,981) | 46,438) | 40,176) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,771) | 3,899) | 3,868) | 3,777) | 3,509) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 13.51 | 13.47 | 16.28 | 12.29 | 11.45 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
3 2019 Calculation
EV/EBITDA = EV ÷ EBITDA
= 64,443 ÷ 4,771 = 13.51
4 Click competitor name to see calculations.
The financial trajectory from 2015 to 2019 is characterized by a general increase in Enterprise Value and consistent growth in EBITDA, leading to a variable valuation multiple. While operational earnings grew steadily throughout the period, the Enterprise Value exhibited higher volatility, which drove the fluctuations in the EV/EBITDA ratio.
- Enterprise Value (EV) Trends
- Enterprise Value grew from 40,176 million US$ in 2015 to 64,443 million US$ in 2019. A significant peak occurred in 2017 at 62,981 million US$, followed by a contraction to 52,515 million US$ in 2018, before rebounding to its highest level in 2019.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization demonstrated a consistent upward trend, rising every year from 3,509 million US$ in 2015 to 4,771 million US$ in 2019. The most substantial year-over-year growth occurred between 2018 and 2019, where EBITDA increased by approximately 22%.
- EV/EBITDA Ratio Analysis
- The valuation multiple expanded from 11.45 in 2015 to a peak of 16.28 in 2017, indicating that Enterprise Value grew at a much faster rate than operational earnings during this interval. In 2018, the ratio contracted to 13.47, reflecting a decrease in Enterprise Value despite continued EBITDA growth. The period concluded with the ratio stabilizing at 13.51 in 2019, suggesting a synchronization between market valuation and earnings performance.
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