Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Abiomed Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial performance from March 31, 2017, to March 31, 2022, is characterized by significant volatility in market valuation contrasted with a steady expansion of invested capital. Market Value Added (MVA) remained positive throughout the entire period, indicating that the market consistently valued the entity well above the actual capital invested in its operations.
- Market Value Volatility
- A substantial increase in market value was recorded between 2017 and 2018, with the valuation rising from US$ 5.74 billion to a peak of US$ 17.20 billion. This peak was followed by a downward trend, reaching a low of US$ 8.38 billion in 2020. A recovery occurred in 2021, bringing the value to US$ 12.07 billion, before it moderated to US$ 9.91 billion by March 31, 2022.
- Invested Capital Growth
- Invested capital exhibited a consistent upward trajectory for most of the analyzed period. From an initial US$ 226.72 million in 2017, capital investment grew steadily to a peak of US$ 737.88 million in 2021. A slight contraction was observed in the final year, with invested capital decreasing to US$ 693.37 million in 2022.
- Market Value Added (MVA) Interpretation
- MVA trends closely tracked the fluctuations of the market value, as the magnitude of the market capitalization far outweighed the amount of invested capital. The maximum value creation was realized in 2018, with an MVA of US$ 16.92 billion. While MVA experienced a notable decline following 2018, the 2022 MVA of US$ 9.21 billion remains significantly higher than the US$ 5.51 billion reported in 2017, suggesting a net increase in the perceived value created over the six-year horizon.
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MVA Spread Ratio
Abiomed Inc., MVA spread ratio calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 9,211,960) | 11,336,044) | 7,784,733) | 10,975,901) | 16,924,322) | 5,513,197) | |
| Invested capital2 | 693,367) | 737,876) | 594,867) | 497,537) | 273,719) | 226,723) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 1,328.58% | 1,536.31% | 1,308.65% | 2,206.05% | 6,183.10% | 2,431.69% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | 230.60% | 266.78% | — | — | — | — | |
| Elevance Health Inc. | 108.49% | 116.25% | — | — | — | — | |
| Intuitive Surgical Inc. | 1,400.02% | 2,002.36% | — | — | — | — | |
| Medtronic PLC | 93.80% | 163.10% | — | — | — | — | |
| UnitedHealth Group Inc. | 214.27% | 265.59% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 9,211,960 ÷ 693,367 = 1,328.58%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2022 is characterized by a period of significant volatility in market valuation coupled with a steady expansion of the invested capital base. A substantial surge in market value creation reached its apex in 2018, followed by a period of contraction and eventual stabilization in the spread ratio, despite the overall growth in capital deployment through 2021.
- Market Value Added (MVA)
- A sharp increase is observed from 5.5 billion US dollars in 2017 to a peak of 16.9 billion US dollars in 2018. This peak was followed by a downward trend, reaching a low of 7.8 billion US dollars in 2020. A partial recovery occurred in 2021, with MVA rising to 11.3 billion US dollars, before settling at 9.2 billion US dollars in 2022. These fluctuations suggest significant variability in market sentiment regarding the entity's future value generation.
- Invested Capital
- Invested capital demonstrated a consistent upward trajectory for the majority of the analyzed period, growing from 226.7 million US dollars in 2017 to a peak of 737.9 million US dollars in 2021. A slight reduction was recorded in 2022, with the value descending to 693.4 million US dollars. This represents a significant overall increase in the capital base required to support operations.
- MVA Spread Ratio
- The MVA spread ratio exhibited an extraordinary peak of 6,183.10% in 2018, indicating that market value creation was vastly disproportionate to the capital invested. This ratio underwent a rapid contraction to 2,206.05% in 2019 and further to 1,308.65% in 2020. Although a modest increase to 1,536.31% was noted in 2021, the ratio ended at 1,328.58% in 2022, reflecting a normalization of the relationship between market value and invested capital over time.
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MVA Margin
Abiomed Inc., MVA margin calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 9,211,960) | 11,336,044) | 7,784,733) | 10,975,901) | 16,924,322) | 5,513,197) | |
| Revenue | 1,031,753) | 847,522) | 840,883) | 769,432) | 593,749) | 445,304) | |
| Add: Increase (decrease) in deferred revenue | 2,040) | 5,175) | 2,754) | 1,423) | 4,475) | 1,717) | |
| Adjusted revenue | 1,033,793) | 852,697) | 843,637) | 770,855) | 598,224) | 447,021) | |
| Performance Ratio | |||||||
| MVA margin2 | 891.08% | 1,329.43% | 922.76% | 1,423.86% | 2,829.09% | 1,233.32% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Abbott Laboratories | 323.76% | 384.46% | — | — | — | — | |
| Elevance Health Inc. | 46.56% | 54.23% | — | — | — | — | |
| Intuitive Surgical Inc. | 1,209.45% | 1,575.51% | — | — | — | — | |
| Medtronic PLC | 205.92% | 391.27% | — | — | — | — | |
| UnitedHealth Group Inc. | 109.81% | 130.39% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenue
= 100 × 9,211,960 ÷ 1,033,793 = 891.08%
3 Click competitor name to see calculations.
The financial performance between March 31, 2017, and March 31, 2022, reveals a divergence between fundamental revenue growth and market-based valuation metrics. While adjusted revenue demonstrated consistent year-over-year expansion, the Market Value Added (MVA) and the resulting MVA margin exhibited significant volatility.
- Adjusted Revenue Trends
- A sustained upward trajectory is observed in adjusted revenue, which grew from 447,021 thousand US$ in 2017 to 1,033,793 thousand US$ in 2022. This represents a consistent growth pattern, with the most significant increase occurring between 2021 and 2022, where revenue surpassed the one-billion-dollar threshold.
- Market Value Added (MVA) Volatility
- Unlike revenue, MVA fluctuated sharply over the six-year period. A substantial peak occurred on March 31, 2018, reaching 16,924,322 thousand US$. This was followed by a period of decline through 2020, a partial recovery in 2021 to 11,336,044 thousand US$, and a subsequent decrease to 9,211,960 thousand US$ by March 31, 2022.
- MVA Margin Analysis
- The MVA margin, which relates market value creation to revenue, mirrors the volatility of the MVA. The margin reached its highest point in 2018 at 2,829.09%, indicating a period where market valuation vastly outpaced revenue growth. However, a general downward trend is evident thereafter, with the margin falling to 891.08% by 2022. The compression of this margin suggests that while the company expanded its operational scale, the market's valuation premium relative to revenue decreased over time.
In summary, the data indicates a strong operational growth phase characterized by steady revenue increases, contrasted by a volatile market valuation. The decline in MVA margin from its 2018 peak suggests a normalization of market expectations or a shift in investor sentiment despite the company's increasing revenue base.
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