Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Best Buy Co. Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
- Net Earnings
- Net earnings show a generally increasing trend over the six-year period analyzed. Starting at 1,228 million US dollars in 2017, earnings decreased to 1,000 million in 2018, representing a temporary dip. From 2018 onwards, net earnings rose steadily, reaching 2,454 million US dollars in 2022. The most notable increase occurred between 2021 and 2022, with net earnings growing by 656 million US dollars, indicating strong profitability improvements in the final year examined.
- Earnings Before Tax (EBT)
- EBT exhibits a steady upward trajectory from 1,816 million US dollars in 2017 to 3,028 million in 2022. The values between 2017 and 2019 are relatively flat, with incremental increases, followed by more pronounced growth starting in 2020. The year-on-year increase from 2021 to 2022 is particularly significant, with a rise of 651 million US dollars, mirroring the notable growth in net earnings and suggesting effective tax and operational management.
- Earnings Before Interest and Tax (EBIT)
- EBIT follows a pattern similar to that of EBT, starting at 1,888 million US dollars in 2017 and increasing consistently each year to reach 3,053 million in 2022. The growth rate accelerates from 2020 onwards, reflecting enhanced operational performance before considering interest obligations and taxes. This steady improvement suggests increased efficiency or revenue growth that positively impacts core operating profitability.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA demonstrates clear and consistent growth from 2,542 million US dollars in 2017 to 3,922 million in 2022. The increase in EBITDA is comparatively robust, reinforcing an overall expansion in cash-generating operating activities before non-cash expenses are factored in. The sharpest increase is observed between 2021 and 2022, with a growth of 654 million US dollars, highlighting enhanced earnings quality and operational cash flow generation capacity.
- Overall Observations
- Across all profitability metrics presented, a strong upward trend is evident over the six-year period. The temporary decline in net earnings in 2018 stands out but was followed by steady recovery and rapid growth through to 2022. The alignment between EBT, EBIT, and EBITDA growth suggests improvements in both operational performance and control over non-operational costs. The accelerated growth in later years may indicate successful strategic initiatives or favorable market conditions contributing to enhanced financial results.
Enterprise Value to EBITDA Ratio, Current
Best Buy Co. Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 16,720) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 3,922) |
| Valuation Ratio | |
| EV/EBITDA | 4.26 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Amazon.com Inc. | 18.81 |
| Home Depot Inc. | 16.60 |
| Lowe’s Cos. Inc. | 12.79 |
| TJX Cos. Inc. | 17.75 |
| EV/EBITDA, Sector | |
| Consumer Discretionary Distribution & Retail | 36.71 |
| EV/EBITDA, Industry | |
| Consumer Discretionary | 31.18 |
Based on: 10-K (reporting date: 2022-01-29).
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
Best Buy Co. Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 21,230) | 25,436) | 12,068) | 18,449) | 17,707) | 11,308) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 3,922) | 3,268) | 2,869) | 2,731) | 2,575) | 2,542) | |
| Valuation Ratio | |||||||
| EV/EBITDA3 | 5.41 | 7.78 | 4.21 | 6.76 | 6.88 | 4.45 | |
| Benchmarks | |||||||
| EV/EBITDA, Competitors4 | |||||||
| Amazon.com Inc. | 28.04 | 21.27 | 32.24 | — | — | — | |
| Home Depot Inc. | 14.08 | 16.53 | 12.34 | — | — | — | |
| Lowe’s Cos. Inc. | 12.43 | 14.41 | 8.98 | — | — | — | |
| TJX Cos. Inc. | 13.00 | 65.35 | 10.33 | — | — | — | |
| EV/EBITDA, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 20.13 | 20.16 | 24.23 | — | — | — | |
| EV/EBITDA, Industry | |||||||
| Consumer Discretionary | 19.78 | 21.32 | 29.33 | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 21,230 ÷ 3,922 = 5.41
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited significant fluctuations over the observed periods. Initially rising from 11,308 million USD in early 2017 to a peak of 18,449 million USD in early 2019, it then sharply declined to 12,068 million USD by early 2020. Subsequently, the EV increased substantially to reach 25,436 million USD in early 2021 before decreasing again to 21,230 million USD by early 2022.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA displayed a consistent upward trajectory throughout the entire timeframe. Starting at 2,542 million USD in early 2017, it steadily increased each year, reaching 3,922 million USD by early 2022. This trend indicates improving operational performance and earnings capacity over time.
- EV/EBITDA Ratio
- The EV/EBITDA ratio showed considerable volatility in line with changes in enterprise value relative to earnings. After an initial ratio of 4.45 in early 2017, it increased to 6.88 in early 2018 and slightly declined to 6.76 in early 2019. The ratio then dropped significantly to 4.21 in early 2020, aligning with the reduced enterprise value. A sharp increase to 7.78 followed in early 2021, before it decreased to 5.41 in early 2022. This variation suggests fluctuating market valuations relative to earnings, reflecting changing investor sentiment or market conditions.