Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Reynolds American Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
The financial data exhibits a consistent upward trajectory across all measured profitability metrics over the five-year period from 2012 through 2016.
- Net Income
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Net income increased steadily from $1,272 million in 2012 to $6,073 million in 2016. This more than fourfold growth indicates significant improvements in profitability and potentially effective cost management or revenue expansion strategies. The largest single increase occurred between 2015 and 2016, nearly doubling.
- Earnings Before Tax (EBT)
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EBT followed a similar pattern, rising from $1,953 million in 2012 to $9,691 million in 2016. The growth witnessed in EBT reflects enhanced operational performance prior to tax expenses, with substantial jumps visible especially from 2014 onward, suggesting increased earnings potential before fiscal charges.
- Earnings Before Interest and Tax (EBIT)
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EBIT showed a consistent and robust increase from $2,187 million in 2012 to $10,317 million in 2016. This metric, representing core operating profitability, underscores an expansion in the company's earnings capacity from primary business activities without the influence of interest and taxes. The data shows marked acceleration in growth after 2014.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
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EBITDA rose from $2,318 million in 2012 to $10,440 million in 2016, reflecting strong growth in operational cash flow generation capacity. The consistent gap between EBITDA and EBIT values suggests stable depreciation and amortization expenses. The upward trend indicates improving operational efficiency and possibly successful strategies in asset utilization and overall cost control.
Overall, the data indicates a pronounced improvement in profitability and operational performance over the analyzed period. The consistent increases across net income, EBT, EBIT, and EBITDA point to enhanced earning power and efficient management. The accelerating growth from 2014 to 2016 may warrant further investigation into the underlying drivers such as revenue growth, cost savings, or structural changes in business operations.
Enterprise Value to EBITDA Ratio, Current
Reynolds American Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 103,094) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 10,440) |
| Valuation Ratio | |
| EV/EBITDA | 9.87 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Coca-Cola Co. | 20.98 |
| Mondelēz International Inc. | 13.08 |
| PepsiCo Inc. | 13.27 |
| Philip Morris International Inc. | 23.10 |
Based on: 10-K (reporting date: 2016-12-31).
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
Reynolds American Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 97,440) | 83,957) | 41,466) | 29,415) | 26,890) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 10,440) | 7,076) | 2,654) | 3,103) | 2,318) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 9.33 | 11.87 | 15.62 | 9.48 | 11.60 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
3 2016 Calculation
EV/EBITDA = EV ÷ EBITDA
= 97,440 ÷ 10,440 = 9.33
4 Click competitor name to see calculations.
The financial data over the five-year period demonstrates notable fluctuations in enterprise value (EV), EBITDA, and the EV/EBITDA ratio, reflecting dynamic changes in the company's valuation and operational profitability.
- Enterprise Value (EV)
- The enterprise value shows a generally increasing trend, rising from 26,890 million US dollars in 2012 to 97,440 million US dollars in 2016. The growth is particularly significant between 2014 and 2016, where EV more than doubled from 41,466 million to 97,440 million US dollars, indicating substantial expansion or market revaluation during this period.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA experienced some volatility but overall exhibited a strong upward trend. From 2,318 million US dollars in 2012, EBITDA rose steadily until 2013, dropped slightly in 2014, and then surged dramatically to 10,440 million US dollars by 2016. The sharp increases observed after 2014 suggest either enhanced operational efficiency, expansion, or favorable market conditions impacting earnings before accounting for interest and taxes.
- EV/EBITDA Ratio
- The EV/EBITDA ratio reflects the valuation multiple and shows variability corresponding to changes in both EV and EBITDA. The ratio decreased from 11.6 in 2012 to 9.48 in 2013, indicating a more attractive valuation relative to earnings. However, it spiked to 15.62 in 2014, suggesting a peak in valuation or a drop in EBITDA relative to enterprise value that year. Subsequently, the ratio declined again to 9.33 by 2016, implying improving valuation metrics where EBITDA growth outpaced enterprise value increase, signaling potentially better investor perceptions or improved company profitability during the final years of the period.
Overall, the trends show a company enhancing its scale and profitability substantially, especially from 2014 onward, with valuation multiples adjusting in response to operational performance and market conditions. The large growth in both EV and EBITDA suggests positive developments in business fundamentals or external perceptions of growth potential.