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
Axon Enterprise 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
Between 2018 and 2022, a significant upward trajectory in Market Value Added (MVA) is observed, indicating substantial value creation for shareholders. The MVA grew from 2,645,560 thousand US$ in 2018 to 12,940,817 thousand US$ in 2022, representing a profound increase in the market's valuation of the company relative to the capital invested in its operations.
- Market Fair Value Trends
- The market value of the entity exhibited strong growth over the five-year period. A notable acceleration occurred in 2020, where the value surged to 10,082,766 thousand US$ from 4,392,273 thousand US$ in 2019. Despite a marginal contraction in 2021 to 9,423,859 thousand US$, the value rebounded sharply in 2022 to reach a peak of 14,548,617 thousand US$.
- Invested Capital Evolution
- Invested capital remained relatively stable in the early period, with a slight decrease observed in 2019 to 500,291 thousand US$. However, starting in 2020, a consistent upward trend in capital allocation is evident, with invested capital rising to 722,746 thousand US$ in 2020, 1,262,920 thousand US$ in 2021, and 1,607,800 thousand US$ by the end of 2022. This suggests an increase in the company's asset base or funding requirements to support growth.
- MVA Dynamics and Interpretation
- The expansion of MVA from 2018 to 2022 demonstrates that the market value grew at a rate far exceeding the increase in invested capital. The most significant jump occurred in 2020, where MVA more than doubled to 9,360,020 thousand US$. Although 2021 saw a decline in MVA to 8,160,939 thousand US$, this was driven by the simultaneous decrease in market value and a sharp increase in invested capital. The recovery in 2022 to 12,940,817 thousand US$ confirms a strong market confidence in the company's ability to generate returns well above its cost of capital.
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MVA Spread Ratio
Axon Enterprise 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 | 12,940,817) | 8,160,939) | 9,360,020) | 3,891,982) | 2,645,560) | |
| Invested capital2 | 1,607,800) | 1,262,920) | 722,746) | 500,291) | 631,660) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 804.88% | 646.20% | 1,295.06% | 777.94% | 418.83% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | 250.73% | 256.11% | — | — | — | |
| Caterpillar Inc. | 194.33% | 165.08% | — | — | — | |
| Eaton Corp. plc | 149.39% | 132.30% | — | — | — | |
| GE Aerospace | 84.87% | 110.77% | — | — | — | |
| Honeywell International Inc. | 224.23% | 209.78% | — | — | — | |
| Lockheed Martin Corp. | 399.68% | 319.28% | — | — | — | |
| RTX Corp. | 59.03% | 61.85% | — | — | — | |
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 × 12,940,817 ÷ 1,607,800 = 804.88%
4 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a substantial increase in shareholder value creation, characterized by a significant expansion in market value relative to the capital invested in the business.
- Market Value Added (MVA)
- A strong upward trajectory is observed in the MVA, which grew from 2,645,560 thousand US dollars in 2018 to 12,940,817 thousand US dollars by 2022. A period of accelerated growth occurred between 2019 and 2020, where the value more than doubled. Despite a moderate contraction in 2021 to 8,160,939 thousand US dollars, the metric reached its five-year peak in 2022, indicating robust market confidence and long-term value appreciation.
- Invested Capital
- Invested capital exhibited a non-linear growth pattern. Following a slight decrease from 631,660 thousand US dollars in 2018 to 500,291 thousand US dollars in 2019, a consistent and aggressive expansion was recorded. By the end of 2022, invested capital reached 1,607,800 thousand US dollars, representing a significant increase in the resources deployed to generate returns.
- MVA Spread Ratio
- The MVA spread ratio demonstrates high volatility but remains consistently elevated throughout the period. The ratio peaked in 2020 at 1,295.06%, suggesting a period of exceptional value creation efficiency relative to the capital base. A sharp correction occurred in 2021, with the ratio falling to 646.20%, which coincides with the increase in invested capital and a dip in MVA. However, a recovery was noted in 2022, with the ratio rising to 804.88%, signaling a sustained ability to generate market value far exceeding the cost of invested capital.
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MVA Margin
Axon Enterprise 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 | 12,940,817) | 8,160,939) | 9,360,020) | 3,891,982) | 2,645,560) | |
| Net sales | 1,189,935) | 863,381) | 681,003) | 530,860) | 420,068) | |
| Add: Increase (decrease) in deferred revenue | 156,728) | 176,131) | 69,381) | 24,367) | 56,151) | |
| Adjusted net sales | 1,346,663) | 1,039,512) | 750,384) | 555,227) | 476,219) | |
| Performance Ratio | ||||||
| MVA margin2 | 960.95% | 785.07% | 1,247.36% | 700.97% | 555.53% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | 191.47% | 203.39% | — | — | — | |
| Caterpillar Inc. | 188.24% | 190.31% | — | — | — | |
| Eaton Corp. plc | 221.57% | 198.58% | — | — | — | |
| GE Aerospace | 76.94% | 111.81% | — | — | — | |
| Honeywell International Inc. | 295.90% | 293.22% | — | — | — | |
| Lockheed Martin Corp. | 161.14% | 136.30% | — | — | — | |
| RTX Corp. | 96.78% | 107.41% | — | — | — | |
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 sales
= 100 × 12,940,817 ÷ 1,346,663 = 960.95%
3 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a strong upward trajectory in shareholder value creation and revenue growth. The Market Value Added (MVA) and adjusted net sales demonstrate a general positive correlation, although the rate of market valuation growth has exhibited significant volatility relative to revenue gains.
- Market Value Added (MVA) Trends
- The MVA experienced substantial growth over the five-year period, increasing from $2,645,560 thousand in 2018 to $12,940,817 thousand by the end of 2022. A notable surge occurred between 2019 and 2020, where the value more than doubled. Despite a moderate contraction in 2021 to $8,160,939 thousand, the figure reached its peak in 2022, indicating a strong overall expansion in the market's valuation of the company beyond its invested capital.
- Adjusted Net Sales Performance
- Adjusted net sales displayed consistent and uninterrupted annual growth. Revenue rose steadily from $476,219 thousand in 2018 to $1,346,663 thousand in 2022. This linear progression suggests a stable and scalable expansion of the core business operations, providing a reliable foundation for the company's valuation.
- MVA Margin Analysis
- The MVA margin, representing the ratio of market value added to adjusted net sales, showed significant fluctuations. The margin increased from 555.53% in 2018 to a peak of 1,247.36% in 2020, suggesting that market expectations grew at a pace far exceeding actual revenue growth during that window. A sharp correction occurred in 2021, with the margin falling to 785.07%, before recovering to 960.95% in 2022. This volatility indicates that while the company maintains a high premium in the market, the valuation multiple is sensitive to external market conditions or shifts in investor sentiment.
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