Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Time Warner Cable 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).
The financial performance between 2011 and 2015 is characterized by a significant expansion in profitability during the 2012 fiscal year, followed by a period of relative stagnation and a gradual decline in net earnings.
- EBITDA Performance
- A substantial increase in EBITDA is observed between 2011 and 2012, rising from US$ 7,013 million to US$ 8,214 million. Following this peak, the metric experienced a slight contraction in 2013 but maintained a steady recovery through 2015, ending at US$ 8,086 million. This suggests a level of operational stability in core earnings before the impact of non-cash charges and financial obligations.
- Operating Income and Profitability Trends
- EBIT and EBT mirrored the 2012 peak but failed to recover to those levels in subsequent years. EBIT decreased from a high of US$ 4,950 million in 2012 to US$ 4,390 million by 2015. Similarly, EBT fell from US$ 3,336 million in 2012 to US$ 2,988 million in 2015, indicating a narrowing of profit margins prior to taxes.
- Net Income Analysis
- Net income attributable to shareholders exhibits a downward trend following the 2012 peak of US$ 2,155 million, falling to US$ 1,844 million by 2015. The divergence between the relatively stable EBITDA and the declining net income suggests that increasing depreciation, amortization, interest, or tax burdens have negatively impacted the final bottom-line results over the analyzed period.
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Enterprise Value to EBITDA Ratio, Current
Time Warner Cable Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 81,348) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 8,086) |
| Valuation Ratio | |
| EV/EBITDA | 10.06 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Alphabet Inc. | 19.13 |
| Comcast Corp. | 3.84 |
| Meta Platforms Inc. | 15.03 |
| Netflix Inc. | 9.19 |
| Walt Disney Co. | 12.88 |
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
Time Warner Cable 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 | 73,738) | 65,077) | 64,756) | 48,931) | 45,664) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 8,086) | 8,038) | 7,875) | 8,214) | 7,013) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 9.12 | 8.10 | 8.22 | 5.96 | 6.51 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
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
= 73,738 ÷ 8,086 = 9.12
4 Click competitor name to see calculations.
The valuation of the entity, as measured by the Enterprise Value to EBITDA ratio, demonstrates a general expansion over the five-year period ending December 31, 2015. Starting at 6.51 in 2011, the ratio experienced a brief decline in 2012 before rising significantly to 9.12 by the end of 2015. This overall trend indicates an increase in the market valuation relative to the company's operational cash flow.
- Enterprise Value Growth
- A consistent upward trajectory is observed in Enterprise Value, which rose from 45,664 million US$ in 2011 to 73,738 million US$ in 2015. A substantial increase occurred between 2012 and 2013, where the value grew from 48,931 million US$ to 64,756 million US$, representing a significant shift in the company's total valuation.
- EBITDA Performance
- Operational earnings remained relatively stagnant after an initial increase in 2012. Following a peak of 8,214 million US$ in 2012, EBITDA fluctuated narrowly between 7,875 million US$ and 8,086 million US$ through 2015, suggesting that core operational profitability did not scale in proportion to the increase in enterprise value.
- EV/EBITDA Multiple Expansion
- The increase in the EV/EBITDA ratio from 5.96 in 2012 to 9.12 in 2015 is primarily driven by the expansion of Enterprise Value rather than growth in EBITDA. This divergence indicates that the market applied a higher premium to the company's earnings over time, resulting in a more expensive valuation multiple by the end of the analyzed period.
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