As we saw in the previous part of this series, Wall Street analysts expect Euronav’s (EURN) 4Q17 revenues to fall 18.7% year-over-year. In this part, we’ll see what analysts expect for Euronav’s EBITDA (earnings before interest, tax, depreciation, and amortization) for 4Q17, 2017, and 2018.
Since analysts estimate a rise in Euronav’s revenue compared to 3Q17, they also expect the EBITDA to rise. Their EBITDA estimates for 4Q17 are $60.89 million—a rise from $40.8 million in 3Q17, but a fall from $124.7 million in 4Q16. For 1Q18, the EBITDA estimates are $61.9 million. For 2017 and 2018, the estimates are $232.7 million and $253.9 million, respectively—compared its EBITDA of $476 million in 2016.
Why EBITDA matters?
EBITDA is an indicator of a company’s financial performance. It tells us about a company’s operating profit. Crude oil tanker companies are highly capital intensive and have high non-cash costs, including depreciation. So, it’s important to assess a company’s performance based on the EBITDA. Companies can also be valued based on their EV-to-EBITDA ratios.
Euronav’s EBITDA margin was 32.3% at the end of 3Q16. Based on the estimated revenue and estimated EBITDA, we’ve calculated the estimated 4Q17 EBITDA at 51%. The 3Q17 EBITDA margins for Euronav’s peers are as follows: