Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
3M Co., EBITDA calculation
US$ in millions
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 between 2017 and 2021 is characterized by a V-shaped trajectory, with a notable contraction in profitability peaking in 2019 followed by a strong recovery through 2021. All key profitability metrics, including EBITDA and Net Income, exhibit synchronized movements, suggesting that the fluctuations were driven by operational factors rather than isolated financial adjustments.
- EBITDA Performance Trends
- Earnings before interest, tax, depreciation and amortization experienced a decline from US$ 9,414 million in 2017 to a period low of US$ 7,753 million in 2019. This represents a decrease of approximately 17.7% over two years. However, a rapid recovery occurred in 2020 and 2021, with EBITDA reaching a five-year peak of US$ 9,617 million by the end of 2021.
- Operational Profitability and EBIT
- Earnings before interest and tax (EBIT) mirrored the EBITDA trend, falling from US$ 7,870 million in 2017 to US$ 6,160 million in 2019. The subsequent rebound to US$ 7,702 million in 2021 indicates a restoration of operational efficiency. The gap between EBITDA and EBIT suggests an increase in depreciation and amortization expenses, which rose from US$ 1,544 million in 2017 to US$ 1,915 million in 2021.
- Net Income and Bottom-Line Correlation
- Net income attributable to 3M followed the same cyclical pattern, dipping to US$ 4,570 million in 2019 before climbing to a period high of US$ 5,921 million in 2021. The consistency between the movement of EBITDA and Net Income indicates that the recovery in operating earnings translated effectively into shareholder profit.
- Earnings Before Tax (EBT) Stability
- EBT showed a similar contraction and recovery phase, moving from US$ 7,548 million in 2017 to US$ 5,712 million in 2019, before recovering to US$ 7,214 million in 2021. The close alignment between EBT and EBIT suggests that interest expenses remained relatively stable or proportional throughout the analyzed period.
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Enterprise Value to EBITDA Ratio, Current
3M Co., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 78,269) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 9,617) |
| Valuation Ratio | |
| EV/EBITDA | 8.14 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | 23.63 |
| Caterpillar Inc. | 25.77 |
| Eaton Corp. plc | 26.78 |
| GE Aerospace | 27.53 |
| Honeywell International Inc. | 10.90 |
| Lockheed Martin Corp. | 16.10 |
| RTX Corp. | 19.02 |
| EV/EBITDA, Sector | |
| Capital Goods | 34.08 |
| EV/EBITDA, Industry | |
| Industrials | 23.45 |
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
3M Co., 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 millions) | ||||||
| Enterprise value (EV)1 | 106,224) | 116,495) | 111,816) | 126,601) | 142,683) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 9,617) | 9,146) | 7,753) | 8,838) | 9,414) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 11.05 | 12.74 | 14.42 | 14.32 | 15.16 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 12.43 | — | — | — | — | |
| Eaton Corp. plc | 17.06 | — | — | — | — | |
| GE Aerospace | 95.57 | — | — | — | — | |
| Honeywell International Inc. | 15.57 | — | — | — | — | |
| Lockheed Martin Corp. | 11.97 | — | — | — | — | |
| RTX Corp. | 15.48 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Capital Goods | 19.87 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Industrials | 16.30 | — | — | — | — | |
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
= 106,224 ÷ 9,617 = 11.05
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA (EV/EBITDA) ratio demonstrates a consistent downward trajectory from 2017 to 2021, indicating a compression in the valuation multiple relative to operational earnings over the five-year period.
- Enterprise Value Trends
- A general decline in enterprise value is observed, moving from 142,683 million USD in 2017 to 106,224 million USD by 2021. Despite a temporary increase in 2020 to 116,495 million USD, the overall trend represents a significant contraction in the total market valuation of the entity.
- EBITDA Performance
- Operational earnings exhibited a U-shaped pattern. After declining from 9,414 million USD in 2017 to a period low of 7,753 million USD in 2019, EBITDA recovered steadily. By December 31, 2021, EBITDA reached 9,617 million USD, marking the highest value in the analyzed period.
- EV/EBITDA Ratio Dynamics
- The ratio decreased from 15.16 in 2017 to 11.05 in 2021. This compression was primarily driven by the convergence of a decreasing enterprise value and a recovering EBITDA. The most notable shift occurred between 2019 and 2021, where the ratio fell from 14.42 to 11.05, suggesting a lower valuation multiple was attributed to the company's earnings capacity toward the end of the period.
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