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.
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- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
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MVA
Biogen Inc., MVA calculation
US$ in thousands
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).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data reveals several key trends over the five-year period ending December 31, 2021. The market (fair) value of the company exhibited a consistent downward trend, decreasing each year from approximately $74.99 billion in 2017 to about $37.36 billion by the end of 2021. This represents a significant reduction in market value, indicating challenges in market perception or company valuation during this period.
In contrast, invested capital showed a more variable but generally increasing trend, rising from around $12.48 billion in 2017 to approximately $13.82 billion in 2021. Although there was a dip in 2020, the invested capital level in 2021 surpassed the initial 2017 figure. This increase suggests ongoing investment or asset accumulation despite the declining market valuation.
Market value added (MVA), calculated as the difference between market value and invested capital, also followed a declining pattern. Starting at roughly $62.52 billion in 2017, MVA dropped steadily over the years, reaching approximately $23.54 billion at the end of 2021. This downward trajectory indicates a shrinking gap between market value and the invested capital, potentially reflecting diminished investor confidence or lower perceived excess returns above invested capital.
- Market Value Trend
- Decreased consistently from $74.99 billion to $37.36 billion over five years, showing reduced market valuation.
- Invested Capital
- Increased slightly overall from $12.48 billion to $13.82 billion, with a minor dip in 2020.
- Market Value Added (MVA)
- Declined sharply from $62.52 billion to $23.54 billion, suggesting reduced market premium over invested capital.
MVA Spread Ratio
Biogen Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data over the five-year period reveals a clear downward trend in the market value added (MVA), the MVA spread ratio, and a fluctuating pattern in the invested capital.
- Market Value Added (MVA)
- The MVA shows a consistent decrease from US$62,517,289 thousand at the end of 2017 to US$23,538,398 thousand by the end of 2021. This represents a significant reduction in the market value created over the invested capital, suggesting diminishing market perceptions of value generation or profitability over the period.
- Invested Capital
- Invested capital increased gradually from US$12,476,129 thousand in 2017 to US$14,142,400 thousand in 2019, followed by a dip to US$12,625,400 thousand in 2020, and then a rebound to US$13,824,500 thousand by the end of 2021. This pattern indicates some fluctuations in the capital invested in the business, possibly reflecting changes in asset base, capital expenditures, or financing structure.
- MVA Spread Ratio
- This profitability ratio declined significantly from 501.1% in 2017 to 170.27% in 2021. The continuous fall in the MVA spread ratio aligns with the declining MVA and implies that the excess returns over the cost of capital have been shrinking steadily, signaling a reduced ability to generate returns beyond the invested capital.
Overall, these trends point to a weakening in the company's value creation capabilities as indicated by the shrinking MVA and MVA spread ratio, despite some variability in invested capital. The declining profitability signal may warrant further investigation into operational efficiency, cost management, or market conditions impacting the company's valuation metrics.
MVA Margin
Biogen Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market value added (MVA)
- The market value added displayed a consistent downward trend over the analyzed period. Starting from approximately $62.5 billion at the end of 2017, the MVA declined each year, reaching about $23.5 billion by the end of 2021. This significant decrease suggests a reduction in the company’s market capitalization relative to its invested capital, indicating possible investor concerns or challenges in value creation over the period.
- Revenue
- Revenue experienced fluctuations during the five-year span. It initially increased from roughly $12.3 billion in 2017 to a peak of approximately $14.4 billion in 2019, indicating growth in sales. However, after 2019, revenue declined to about $13.4 billion in 2020 and decreased further to approximately $11.0 billion in 2021. This reversal may point to operational challenges or market conditions negatively impacting sales performance toward the end of the period.
- MVA margin
- The MVA margin, defined as a percentage, also showed a clear declining pattern over the years. Starting at a high of around 509% in 2017, it fell steadily to 214% by 2021. This decline reflects diminishing efficiency in value created per unit of revenue. The margin reduction parallels the decreases noted in both MVA and revenue, together suggesting a downturn in the company’s ability to convert its revenue into market value added effectively.