Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Steel Dynamics Inc., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial performance from 2017 to 2021 is characterized by a period of moderate volatility followed by a substantial surge in operational profitability. EBITDA reflects a cyclical pattern of growth and contraction before experiencing an exponential increase in the final year of the period.
- EBITDA Trend Analysis (2017–2020)
- A growth phase is observed between 2017 and 2018, where EBITDA rose from 1.37 billion to 2.06 billion. This was followed by a two-year downward trend, with values declining to 1.32 billion in 2019 and reaching a period low of 1.13 billion in 2020.
- Exceptional Profitability Surge in 2021
- The year 2021 marked a significant inflection point, with EBITDA increasing to 4.61 billion. This represents a growth of approximately 309% compared to the preceding year, indicating a massive expansion in cash-flow generating capabilities.
- Earnings Correlation and Operational Leverage
- A high degree of correlation is observed between EBITDA, EBIT, and net income, as all three metrics followed an identical trajectory. The consistent gap between EBITDA and EBIT suggests that depreciation and amortization expenses remained relatively stable, even as operating earnings fluctuated. The expansion of net income to 3.21 billion in 2021, mirroring the EBITDA spike, confirms that the growth was driven by operational performance rather than one-time financial adjustments.
The overall trajectory indicates a strong recovery and expansion phase in 2021, far exceeding the peak profitability levels observed in 2018.
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Enterprise Value to EBITDA Ratio, Current
Steel Dynamics Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 18,879,145) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,613,932) |
| Valuation Ratio | |
| EV/EBITDA | 4.09 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Freeport-McMoRan Inc. | 13.47 |
| EV/EBITDA, Industry | |
| Materials | 18.52 |
Based on: 10-K (reporting date: 2021-12-31).
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
Steel Dynamics Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 15,168,019) | 10,864,840) | 6,678,596) | 9,665,432) | 12,412,536) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 4,613,932) | 1,126,144) | 1,323,523) | 2,063,592) | 1,368,633) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 3.29 | 9.65 | 5.05 | 4.68 | 9.07 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Freeport-McMoRan Inc. | 7.20 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Materials | 13.46 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/EBITDA = EV ÷ EBITDA
= 15,168,019 ÷ 4,613,932 = 3.29
4 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 is characterized by significant volatility in both enterprise valuation and operational profitability. A notable trend is the divergence between enterprise value and EBITDA in 2020, followed by a sharp convergence in 2021, resulting in a substantial compression of the EV/EBITDA multiple.
- Enterprise Value (EV) Trends
- Enterprise value experienced a period of contraction from 2017 to 2019, declining from 12.41 billion to a low of 6.68 billion. This downward trend reversed sharply starting in 2020, with the value increasing to 10.86 billion and peaking at 15.17 billion by the end of 2021.
- EBITDA Performance
- Operational earnings remained relatively fluctuant between 2017 and 2020, with a peak of 2.06 billion in 2018 and a trough of 1.13 billion in 2020. However, 2021 marked a period of exceptional growth, as EBITDA surged to 4.61 billion, representing a more than fourfold increase over the previous year.
- EV/EBITDA Ratio Analysis
- The valuation multiple exhibited high variability throughout the period. The ratio dropped from 9.07 in 2017 to 4.68 in 2018, remaining relatively stable through 2019. A significant spike occurred in 2020, reaching 9.65, which coincided with a decrease in EBITDA alongside a rising enterprise value. By 2021, the ratio fell to its lowest point in the analyzed period at 3.29, driven by the explosive growth in EBITDA which far outpaced the increase in enterprise value.
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