Microsoft Excel LibreOffice Calc

United Parcel Service Inc. (UPS)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

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

United Parcel Service Inc., EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income 4,791  4,910  3,431  4,844  3,032 
Add: Income tax expense 1,228  2,238  1,705  2,498  1,605 
Earnings before tax (EBT) 6,019  7,148  5,136  7,342  4,637 
Add: Interest expense 605  453  381  341  353 
Earnings before interest and tax (EBIT) 6,624  7,601  5,517  7,683  4,990 
Add: Depreciation and amortization 2,207  2,282  2,224  2,084  1,923 
Earnings before interest, tax, depreciation and amortization (EBITDA) 8,831  9,883  7,741  9,767  6,913 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

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. United Parcel Service Inc.’s EBITDA increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

Enterprise Value to EBITDA Ratio, Current

United Parcel Service Inc., current EV/EBITDA calculation, comparison to benchmarks

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Selected Financial Data (USD $ in millions)
Enterprise value (EV) 109,675 
Earnings before interest, tax, depreciation and amortization (EBITDA) 8,831 
Ratio
EV/EBITDA 12.42
Benchmarks
EV/EBITDA, Competitors
CSX Corp. 11.64
FedEx Corp. 7.26
Union Pacific Corp. 12.76
EV/EBITDA, Sector
Industrial Transportation 11.17
EV/EBITDA, Industry
Industrials 14.92

Based on: 10-K (filing date: 2019-02-21).

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

United Parcel Service Inc., historical EV/EBITDA calculation, comparison to benchmarks

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 113,856  110,461  105,252  96,052  99,336 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 8,831  9,883  7,741  9,767  6,913 
Ratio
EV/EBITDA3 12.89 11.18 13.60 9.83 14.37
Benchmarks
EV/EBITDA, Competitors
CSX Corp. 11.03 11.67 11.85 6.65 9.37
FedEx Corp. 9.31 8.50 9.29 11.60 7.45
Union Pacific Corp. 12.78 10.98 10.74 7.42 10.85
EV/EBITDA, Sector
Industrial Transportation 11.67 10.54 11.43 8.73 10.74
EV/EBITDA, Industry
Industrials 15.02 15.26 13.29 11.89 11.61

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

1 See Details »

2 See Details »

2018 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 113,856 ÷ 8,831 = 12.89

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. United Parcel Service Inc.’s EV/EBITDA ratio declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.