Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Waste Management Inc., 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).
- Net Income Attributable to Waste Management, Inc.
- The net income exhibited a general downward trend from 2017 to 2020, starting at $1,949 million in 2017 and decreasing each year to reach $1,496 million in 2020. However, in 2021, there was a notable recovery with net income rising to $1,816 million, indicating a strong rebound in profitability after the decline.
- Earnings Before Tax (EBT)
- EBT increased from $2,191 million in 2017 to a peak of $2,376 million in 2018. Following this peak, a decline occurred over the next two years, reaching $1,893 million in 2020. Similar to net income, EBT rebounded in 2021 to $2,349 million, showing resilience and a recovery trajectory.
- Earnings Before Interest and Tax (EBIT)
- EBIT followed a trend consistent with net income and EBT. It rose from $2,559 million in 2017 to its highest point at $2,760 million in 2018, then declined steadily to $2,350 million in 2020. The year 2021 saw an increase to $2,724 million, nearly recovering the previous peak levels, signaling operational improvements or cost efficiencies.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA demonstrated steady growth during most years, starting at $3,935 million in 2017 and rising to $4,237 million in 2018. While a small decline occurred in 2019 and 2020 to $4,143 million and $4,021 million respectively, 2021 recorded a significant increase to $4,723 million, surpassing previous highs. This suggests stronger cash earnings and could be indicative of improved operational performance or favorable changes in non-cash expenses.
Enterprise Value to EBITDA Ratio, Current
Waste Management Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 72,442) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 4,723) |
| Valuation Ratio | |
| EV/EBITDA | 15.34 |
| Benchmarks | |
| EV/EBITDA, Industry | |
| Industrials | 21.35 |
Based on: 10-K (reporting date: 2021-12-31).
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
Waste Management Inc., historical EV/EBITDA calculation, comparison to benchmarks
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).
The financial data illustrates several noteworthy trends over the five-year period ending December 31, 2021.
- Enterprise Value (EV)
- Enterprise value demonstrated a consistent upward trend from 2017 through 2021. Starting at US$45,929 million in 2017, it increased each year to reach US$72,442 million by 2021. This growth indicates an overall increase in the market valuation of the company across the period, with the most significant rises occurring between 2018 to 2019 and then from 2020 to 2021.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA showed moderate fluctuations throughout the timeframe. It increased from US$3,935 million in 2017 to a peak of US$4,237 million in 2018, followed by a slight decline reaching US$4,021 million in 2020. Thereafter, EBITDA recovered and grew to US$4,723 million by 2021, surpassing its previous peaks. This pattern reflects some volatility possibly due to operational or market conditions, culminating in stronger profitability in the final reported year.
- EV/EBITDA Ratio
- The EV/EBITDA ratio experienced an upward movement overall, rising from 11.67 in 2017 to 15.34 in 2021. This ratio increased notably between 2018 and 2019 and remained elevated through to 2021. The rising ratio suggests that enterprise value expanded at a faster rate than EBITDA, which could imply increased market expectations or valuation multiples, or potentially slower earnings growth relative to rising enterprise value.
In summary, the company’s valuation grew substantially over the period, accompanied by modest EBITDA growth with some volatility. The increase in the EV/EBITDA ratio indicates that the market’s valuation premium relative to earnings before interest, tax, depreciation, and amortization has increased, reflecting changing investor sentiment or market conditions.