Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Norfolk Southern Corp., 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).
An analysis of the financial results from 2017 to 2021 reveals a general growth trajectory in operational profitability, punctuated by a contraction in 2020 followed by a robust recovery in 2021. The core earnings capacity demonstrates resilience, with operational metrics returning to and exceeding pre-2020 levels by the end of the period.
- EBITDA Performance and Trends
- Earnings before interest, tax, depreciation and amortization (EBITDA) increased from 4,737 million in 2017 to 5,234 million in 2019. A notable decline occurred in 2020, with EBITDA falling to 4,309 million, a reduction of approximately 17.7% relative to 2019. This was followed by a significant rebound in 2021, reaching a period high of 5,705 million, reflecting a 32.4% increase over the prior year.
- Operating Cost and Depreciation Analysis
- The gap between EBITDA and EBIT indicates a consistent increase in depreciation and amortization expenses over the five-year period. These expenses rose steadily from 1,059 million in 2017 to 1,181 million in 2021, suggesting sustained capital investment in infrastructure and long-term assets.
- Earnings Volatility and Net Income Divergence
- A significant divergence is observed in the 2017 fiscal year, where net income of 5,404 million substantially exceeded earnings before tax (EBT) of 3,128 million. This suggests the impact of significant non-operating gains or one-time tax benefits. In contrast, from 2018 through 2021, net income remained consistently lower than EBT, aligning more closely with standard operating margins.
- Profitability Correlation
- EBIT, EBT, and EBITDA exhibited highly correlated movement patterns throughout the period. All three metrics peaked in 2021 and experienced a synchronized dip in 2020, confirming that the fluctuations were driven primarily by operational performance and broader economic conditions rather than isolated financial adjustments.
AI Ask an analyst for more
Enterprise Value to EBITDA Ratio, Current
Norfolk Southern Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 75,570) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 5,705) |
| Valuation Ratio | |
| EV/EBITDA | 13.25 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| FedEx Corp. | 7.19 |
| Uber Technologies Inc. | 20.99 |
| Union Pacific Corp. | 14.91 |
| United Airlines Holdings Inc. | 5.91 |
| United Parcel Service Inc. | 8.23 |
| EV/EBITDA, Sector | |
| Transportation | 12.53 |
| EV/EBITDA, Industry | |
| Industrials | 24.16 |
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
Norfolk Southern Corp., 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 | 77,842) | 73,428) | 66,454) | 56,645) | 48,511) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 5,705) | 4,309) | 5,234) | 5,130) | 4,737) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 13.64 | 17.04 | 12.70 | 11.04 | 10.24 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| FedEx Corp. | 8.22 | — | — | — | — | |
| Uber Technologies Inc. | 227.40 | — | — | — | — | |
| Union Pacific Corp. | 15.46 | — | — | — | — | |
| United Airlines Holdings Inc. | 21.49 | — | — | — | — | |
| United Parcel Service Inc. | 9.56 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Transportation | 12.73 | — | — | — | — | |
| 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
= 77,842 ÷ 5,705 = 13.64
4 Click competitor name to see calculations.
The financial data reveals a consistent expansion in enterprise value coupled with fluctuating operational earnings, resulting in a volatile valuation multiple over the five-year period ending December 31, 2021.
- Enterprise Value Trend
- A continuous upward trajectory is observed in the enterprise value, which grew from 48,511 million USD in 2017 to 77,842 million USD by 2021. This represents a steady increase in the total market valuation of the entity throughout the analyzed timeframe.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization demonstrated a general growth trend from 2017 to 2019, rising from 4,737 million USD to 5,234 million USD. A significant contraction occurred in 2020, where EBITDA fell to 4,309 million USD, before recovering strongly in 2021 to reach a period peak of 5,705 million USD.
- EV/EBITDA Ratio Analysis
- The valuation multiple exhibited a steady increase from 10.24 in 2017 to 12.70 in 2019. A sharp spike to 17.04 was recorded in 2020, driven by the simultaneous increase in enterprise value and the decline in EBITDA. By 2021, the ratio moderated to 13.64, reflecting a realignment as EBITDA growth outpaced the increase in enterprise value during that fiscal year.
The overall pattern suggests that while the market valuation remained bullish throughout the period, the operational earnings experienced a temporary disruption in 2020, which artificially inflated the valuation multiple before a partial correction occurred in 2021.
AI Ask an analyst for more