Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Parker-Hannifin Corp., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Net Income Attributable to Common Shareholders
- The net income showed an overall upward trend from 2017 to 2021, increasing from approximately 983 million USD to over 1.7 billion USD. There was a notable peak in 2021, followed by a decline in 2022 to about 1.3 billion USD. This indicates strong profitability growth for several years, with a slight contraction in the most recent period.
- Earnings Before Tax (EBT)
- EBT increased steadily from 1.3 billion USD in 2017 to a peak of roughly 2.25 billion USD in 2021. Similar to net income, the figure declined in 2022 to approximately 1.6 billion USD. This pattern suggests that the company experienced robust operational performance leading to higher earnings before tax, with some degree of pressure or challenges emerging in 2022.
- Earnings Before Interest and Tax (EBIT)
- EBIT exhibited a rising trend over the years, growing from about 1.5 billion USD in 2017 to nearly 2.5 billion USD in 2021. However, in 2022 the EBIT fell markedly to around 1.87 billion USD. The growth through 2021 indicates enhanced operational efficiency or higher core earnings, while the 2022 decline suggests increased costs, reduced revenues, or other operational setbacks during the last year.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA rose consistently from 2017 at approximately 1.85 billion USD to a peak above 3 billion USD in 2021. The subsequent decrease in 2022 to about 2.44 billion USD reflects a notable contraction. This trend indicates improving cash profitability until 2021, followed by a downturn potentially due to operational difficulties or market factors impacting earnings quality.
- Summary of Trends
- Overall, all the key profitability metrics showed substantial growth over the five years ending in 2021, with 2021 consistently showing peak results. In 2022, there was a clear reversal or decline across net income, EBT, EBIT, and EBITDA. The data suggests that after a period of expanding profitability and operational strength, the company faced challenges in 2022 that negatively impacted earnings and cash flow measures. Monitoring future periods will be important to determine if this represents a short-term setback or a longer-term trend.
Enterprise Value to EBITDA Ratio, Current
Parker-Hannifin Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 55,695,791) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 2,441,242) |
| Valuation Ratio | |
| EV/EBITDA | 22.81 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 13.33 |
| Eaton Corp. plc | 26.14 |
| GE Aerospace | 28.54 |
| Honeywell International Inc. | 17.74 |
| Lockheed Martin Corp. | 14.33 |
| RTX Corp. | 18.56 |
| EV/EBITDA, Sector | |
| Capital Goods | 27.10 |
| EV/EBITDA, Industry | |
| Industrials | 21.90 |
Based on: 10-K (reporting date: 2022-06-30).
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
Parker-Hannifin Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 47,574,598) | 45,011,584) | 34,689,668) | 24,040,987) | 26,811,235) | 25,893,192) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 2,441,242) | 3,092,383) | 2,358,319) | 2,559,752) | 2,382,235) | 1,846,306) | |
| Valuation Ratio | |||||||
| EV/EBITDA3 | 19.49 | 14.56 | 14.71 | 9.39 | 11.25 | 14.02 | |
| Benchmarks | |||||||
| EV/EBITDA, Competitors4 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | 13.86 | 12.43 | 19.87 | — | — | — | |
| Eaton Corp. plc | 19.18 | 17.06 | 22.11 | — | — | — | |
| GE Aerospace | 14.82 | 95.57 | 9.35 | — | — | — | |
| Honeywell International Inc. | 18.01 | 15.57 | 20.21 | — | — | — | |
| Lockheed Martin Corp. | 14.98 | 11.97 | 9.97 | — | — | — | |
| RTX Corp. | 14.92 | 15.48 | 41.71 | — | — | — | |
| EV/EBITDA, Sector | |||||||
| Capital Goods | 19.01 | 19.87 | 25.02 | — | — | — | |
| EV/EBITDA, Industry | |||||||
| Industrials | 16.44 | 16.30 | 30.80 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 47,574,598 ÷ 2,441,242 = 19.49
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value shows a general upward trend over the six-year period. Starting at approximately $25.9 billion in mid-2017, it increased slightly by mid-2018 to around $26.8 billion. It then experienced a decline in mid-2019 to about $24.0 billion before rising significantly to $34.7 billion in mid-2020. The growth continued strongly, reaching $45.0 billion in mid-2021 and further to nearly $47.6 billion by mid-2022. This indicates a substantial increase in the market valuation of the company's overall capital structure, particularly notable in the last three years of the period.
- Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA experienced fluctuations during the period under review. Initially, there was a strong increase from about $1.85 billion in mid-2017 to approximately $2.38 billion in mid-2018. This upward trend continued into mid-2019, reaching roughly $2.56 billion. However, EBITDA declined in mid-2020 to nearly $2.36 billion, possibly reflecting operational challenges. It rebounded significantly in mid-2021, peaking at approximately $3.09 billion, before declining again in mid-2022 to about $2.44 billion. This variability suggests challenges in consistent earnings generation, with a peak in 2021 followed by a notable decrease.
- EV/EBITDA Ratio
- The EV/EBITDA ratio demonstrates variability that corresponds partly to the movements in both enterprise value and EBITDA. Starting at 14.02 in 2017, the ratio decreased steadily to a low of 9.39 in 2019, indicating relatively better earnings performance or valuation at that time. The ratio rose sharply in 2020 to 14.71 and remained elevated in 2021 at 14.56, suggesting that enterprise value grew faster or EBITDA declined. In mid-2022, the ratio surged to 19.49, a significant increase that may indicate a stretched valuation relative to earnings or decreased earnings power. This rising ratio in the later years could signal market concerns over earnings sustainability or increased investor expectations.
- Overall Insights
- The data reveals significant growth in enterprise value over the period, especially since 2020, indicating increased market capitalization or debt levels. EBITDA showed growth initially but experienced volatility with a peak in 2021 followed by a decline. The substantial increase in EV/EBITDA ratio in 2022 suggests a potential overvaluation or diminishing profitability relative to the company’s valuation. The fluctuations in earnings and valuations highlight a period of operational and market uncertainties impacting financial performance and investor perceptions.