Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Northrop Grumman Corp., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 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).
An analysis of the earnings metrics from 2018 to 2022 reveals a period of volatility characterized by a significant peak in fiscal year 2021. EBITDA and net earnings exhibited a synchronized trajectory, experiencing a decline in 2019, a recovery in 2020, an exceptional surge in 2021, and a subsequent correction in 2022.
- EBITDA Trend Analysis
- EBITDA fluctuated from US$ 5,104 million in 2018 to a low of US$ 4,341 million in 2019, before ascending to a peak of US$ 10,733 million in 2021. This represents a growth of approximately 147% between 2019 and 2021. The 2022 figure of US$ 7,684 million indicates a reduction from the previous year's peak but remains substantially higher than the levels observed between 2018 and 2020.
- Operating Profitability and Depreciation
- The variance between EBITDA and EBIT provides insight into depreciation and amortization expenses. This gap remained relatively consistent from 2019 through 2022, ranging between approximately US$ 1.2 billion and US$ 1.3 billion. This stability suggests that non-cash charges related to capital assets did not fluctuate in proportion to the significant swings in operating earnings.
- Earnings Conversion and Net Profitability
- Net earnings closely mirrored the volatility of EBITDA. The most notable expansion occurred in 2021, where net earnings reached US$ 7,005 million, coinciding with the spike in EBITDA. In 2022, net earnings normalized to US$ 4,896 million. Despite the 2022 decline, the net earnings remained higher than the figures reported in 2018, 2019, and 2020, indicating a shift in the company's baseline profitability over the five-year period.
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Enterprise Value to EBITDA Ratio, Current
Northrop Grumman Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 79,803) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 7,684) |
| Valuation Ratio | |
| EV/EBITDA | 10.39 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | 23.59 |
| Caterpillar Inc. | 24.22 |
| Eaton Corp. plc | 24.49 |
| GE Aerospace | 25.16 |
| Honeywell International Inc. | 11.33 |
| Lockheed Martin Corp. | 18.01 |
| RTX Corp. | 19.41 |
| EV/EBITDA, Sector | |
| Capital Goods | 30.35 |
| EV/EBITDA, Industry | |
| Industrials | 23.76 |
Based on: 10-K (reporting date: 2022-12-31).
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
Northrop Grumman Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 78,175) | 67,634) | 58,949) | 76,153) | 59,592) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 7,684) | 10,733) | 5,588) | 4,341) | 5,104) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 10.17 | 6.30 | 10.55 | 17.54 | 11.68 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 13.86 | 12.43 | — | — | — | |
| Eaton Corp. plc | 19.18 | 17.06 | — | — | — | |
| GE Aerospace | 14.82 | 95.57 | — | — | — | |
| Honeywell International Inc. | 18.01 | 15.57 | — | — | — | |
| Lockheed Martin Corp. | 14.98 | 11.97 | — | — | — | |
| RTX Corp. | 14.92 | 15.48 | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Capital Goods | 19.01 | 19.87 | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Industrials | 16.46 | 16.30 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 78,175 ÷ 7,684 = 10.17
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA (EV/EBITDA) ratio for Northrop Grumman Corp. exhibited significant volatility between 2018 and 2022, characterized by a valuation peak in 2019 and a sharp contraction in 2021 before returning toward historical averages in 2022. These fluctuations reflect a shifting relationship between the total market value of the enterprise and its operational cash flow generation.
- Enterprise Value (EV) Trends
- Enterprise value demonstrated substantial variance over the five-year period. After increasing from US$ 59,592 million in 2018 to US$ 76,153 million in 2019, the value contracted significantly to US$ 58,949 million in 2020. A consistent upward trajectory followed, with the value rising to US$ 67,634 million in 2021 and reaching a period high of US$ 78,175 million by December 31, 2022.
- EBITDA Performance
- Operational earnings remained relatively stable from 2018 to 2020, fluctuating between US$ 4,341 million and US$ 5,588 million. A pronounced surge was recorded in 2021, with EBITDA peaking at US$ 10,733 million, representing a near-doubling of earnings compared to 2020. This figure subsequently declined to US$ 7,684 million in 2022, although it remained elevated relative to the 2018-2020 baseline.
- EV/EBITDA Ratio Analysis
- The valuation multiple reached its maximum of 17.54 in 2019, a result of elevated enterprise value coinciding with a dip in EBITDA. The ratio then shifted downward, reaching a trough of 6.30 in 2021, driven primarily by the exceptional increase in EBITDA during that fiscal year. By the end of 2022, the ratio moderated to 10.17, suggesting a normalization of the multiple as the enterprise value continued to climb while EBITDA experienced a correction.
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