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
Align Technology Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
2 Invested capital. See details »
The financial trajectory between 2018 and 2022 is characterized by significant volatility in market valuation contrasting with a steady expansion of the invested capital base. The Market Value Added (MVA) exhibits a sharp peak in 2020 followed by a substantial contraction, indicating a shift in investor sentiment and the perceived future growth potential of the firm relative to the capital deployed.
- Market Valuation Trends
- The market value experienced a non-linear progression, starting at 20.7 billion USD in 2018 and declining in 2019. A rapid escalation occurred in 2020, reaching a peak of 45.0 billion USD, before entering a sustained downward trend that resulted in a valuation of 23.4 billion USD by the end of 2022.
- Invested Capital Growth
- Invested capital demonstrated consistent year-over-year growth throughout the period. From a base of 1.5 billion USD in 2018, capital increased to 3.3 billion USD by 2022. This reflects a continuous increase in the resources committed to the business, independent of the volatility observed in market pricing.
- Market Value Added (MVA) Performance
- The MVA closely mirrored the fluctuations of the market value, reaching its maximum of 42.5 billion USD in 2020. By December 31, 2022, the MVA decreased to 20.0 billion USD. The simultaneous increase in invested capital and the decrease in MVA between 2020 and 2022 indicates a contraction in the market premium attributed to the company's invested resources.
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MVA Spread Ratio
Align Technology Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 20,021,487) | 37,324,891) | 42,503,935) | 15,412,338) | 19,197,695) | |
| Invested capital2 | 3,344,477) | 2,990,610) | 2,459,204) | 1,524,413) | 1,516,250) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 598.64% | 1,248.07% | 1,728.36% | 1,011.03% | 1,266.13% | |
| 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: 2022-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 20,021,487 ÷ 3,344,477 = 598.64%
4 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 is characterized by a divergence between steadily expanding invested capital and volatile market value added, resulting in a significant contraction of the MVA spread ratio by the end of the period.
- Market Value Added (MVA)
- Market value added exhibited substantial volatility, beginning at 19.2 billion USD in 2018 and reaching a peak of 42.5 billion USD in 2020. Following this apex, a consistent downward trend occurred, with the value retreating to 20.0 billion USD by December 31, 2022. This pattern suggests a period of intense market valuation expansion mid-period followed by a correction to levels approximately aligned with 2018 figures.
- Invested Capital
- Invested capital followed a consistent upward trajectory throughout the five-year analysis period. Starting at 1.5 billion USD in 2018, the capital base grew incrementally to 3.3 billion USD by 2022. This represents a more than twofold increase in the total capital deployed, with the most significant acceleration in investment occurring between 2019 and 2021.
- MVA Spread Ratio
- The MVA spread ratio mirrored the volatility of the MVA while being further impacted by the increasing denominator of invested capital. The ratio peaked at 1,728.36% in 2020, reflecting maximum value creation efficiency relative to capital employed. However, a sharp decline followed, culminating in a low of 598.64% in 2022. The contraction in this ratio indicates that market value added declined even as the company continued to increase its invested capital base, leading to a reduction in the overall efficiency of value generation from a market perspective.
Overall, the data indicates that while the company aggressively scaled its invested capital from 2018 to 2022, the market's valuation of the value added by that capital peaked in 2020 and subsequently diminished, leading to a lower MVA spread ratio at the end of the period than at the beginning.
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MVA Margin
Align Technology Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 20,021,487) | 37,324,891) | 42,503,935) | 15,412,338) | 19,197,695) | |
| Net revenues | 3,734,635) | 3,952,584) | 2,471,941) | 2,406,796) | 1,966,492) | |
| Add: Increase (decrease) in deferred revenues | 214,751) | 449,116) | 241,173) | 189,076) | 137,888) | |
| Adjusted net revenues | 3,949,386) | 4,401,700) | 2,713,114) | 2,595,872) | 2,104,380) | |
| Performance Ratio | ||||||
| MVA margin2 | 506.95% | 847.97% | 1,566.61% | 593.72% | 912.27% | |
| 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: 2022-12-31), 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).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenues
= 100 × 20,021,487 ÷ 3,949,386 = 506.95%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2018 to 2022 reveals significant volatility in market value added (MVA) and its corresponding margin, characterized by a sharp peak in 2020 followed by a steady contraction.
- Market Value Added (MVA) Trends
- The MVA exhibited substantial fluctuations over the five-year period. After a moderate decline between 2018 and 2019, the value surged to a peak of 42,503,935 thousand US$ in 2020. This spike represented a more than twofold increase from the previous year. However, this growth was not sustained, as the MVA declined in 2021 and dropped sharply to 20,021,487 thousand US$ by the end of 2022, nearly returning to 2018 levels.
- Adjusted Net Revenue Trajectory
- Adjusted net revenues demonstrated a more consistent upward trend than MVA for the majority of the period. Revenues grew steadily from 2,104,380 thousand US$ in 2018 to a peak of 4,401,700 thousand US$ in 2021. A reversal occurred in 2022, where revenues decreased to 3,949,386 thousand US$, coinciding with the broader decline in market valuation.
- MVA Margin Analysis
- The MVA margin, which measures the relationship between market value added and net revenues, showed extreme variance. The margin reached a critical high of 1,566.61% in 2020, indicating a period where market valuation far outpaced revenue growth. Following this peak, the margin entered a steep decline, falling to 847.97% in 2021 and further to 506.95% in 2022. The 2022 margin represents the lowest point in the analyzed period, suggesting a significant compression in the market's valuation multiple relative to the company's revenue base.
The divergence between the peak in revenues (2021) and the peak in MVA and MVA margin (2020) suggests that market sentiment peaked ahead of actual revenue maximization. The subsequent decline in all three metrics during 2022 indicates a synchronized contraction in both operational scale and market perceived value.
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