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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Charter Communications Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Price to Earnings (P/E) since 2010
- Analysis of Revenues
- Aggregate Accruals
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MVA
Charter Communications Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
- Market (Fair) Value of Charter
- The market value exhibited an increasing trend from 2019 to 2020, rising from $202.6 billion to approximately $219.8 billion. Following this peak, the value declined consistently over the subsequent years, reaching $207.2 billion in 2021, $147.8 billion in 2022, and further decreasing to $139.1 billion by the end of 2023. This indicates a significant contraction in market valuation after 2020, with the market value in 2023 being notably lower than in 2019.
- Invested Capital
- The invested capital demonstrated relative stability throughout the period. It started at $137.4 billion in 2019, experienced a slight decline to $133.2 billion in 2020, and further reduced marginally to $130.9 billion in 2021. From 2022 onwards, there was a modest increase, with invested capital rising to $131.3 billion and then to $133.6 billion in 2023. This suggests conservative management of capital investment, with minor fluctuations but no significant expansions or contractions.
- Market Value Added (MVA)
- The MVA peaked at $86.6 billion in 2020, indicating strong value creation above the invested capital during this period. Subsequent years saw a sharp decline, dropping to $76.3 billion in 2021 and plummeting to much lower levels in 2022 ($16.5 billion) and 2023 ($5.5 billion). This substantial decrease in MVA reflects a significant erosion of market value relative to the invested capital in recent years, suggesting challenges in generating market-based returns.
MVA Spread Ratio
Charter Communications Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The Market Value Added experienced a rising trend from 2019 to 2020, increasing from 65,161 million US dollars to 86,599 million US dollars. However, it declined in the subsequent years, dropping to 76,286 million in 2021, followed by a sharp decrease to 16,495 million in 2022 and further down to 5,492 million by the end of 2023. This indicates a significant reduction in the company's market value relative to its invested capital over the last two years.
- Invested Capital
- The Invested Capital showed a slight declining trend from 2019 through 2021, decreasing from 137,438 million US dollars to 130,911 million US dollars. In 2022 and 2023, the invested capital slightly increased, returning to about 133,644 million US dollars by the end of 2023. The fluctuations are relatively minor, suggesting stability in the capital base over the five-year period.
- MVA Spread Ratio
- The MVA Spread Ratio, which measures the difference between the company's return on invested capital and its cost of capital, showed a noticeable decline over the years. It peaked at 65.04% in 2020, then slowly decreased to 58.27% in 2021 before tumbling to 12.56% in 2022 and further down to 4.11% in 2023. This decline aligns with the sharp reductions in Market Value Added, indicating a diminishing ability to generate returns above the cost of invested capital in recent years.
- Overall Analysis
- Collectively, the data reveals that while the company maintained a consistent invested capital base, its market value added and value creation efficiency drastically declined after 2020. The peak in 2020 followed by sustained decreases in market value added and spread ratio suggest challenges in sustaining superior returns. This trend could signal increasing costs of investment, competitive pressures, or operational difficulties impacting value creation for shareholders.
MVA Margin
Charter Communications Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added shows a fluctuating trend over the five-year period. It increased significantly from 65,161 million USD in 2019 to a peak of 86,599 million USD in 2020, demonstrating strong value creation that year. However, it declined in 2021 to 76,286 million USD and experienced a sharp drop in 2022 and 2023, reaching 16,495 million USD and 5,492 million USD respectively. This indicates a substantial erosion in market value added in the last two years.
- Adjusted Revenues
- Adjusted revenues present a consistent upward trend throughout the period. Revenues rose steadily from 45,730 million USD in 2019 to 54,605 million USD in 2023. The growth is gradual but persistent, reflecting ongoing revenue enhancement efforts or organic growth within the company despite fluctuations in market value added.
- MVA Margin
- The MVA margin, which represents the efficiency of market value added relative to adjusted revenues, peaked at 180.14% in 2020 alongside the highest MVA in absolute terms. After this peak, it dropped to 147.55% in 2021, followed by a sharp decrease to 30.51% in 2022 and further to 10.06% in 2023. This significant decline suggests a severe reduction in the return on market value added compared to revenues, indicating deteriorating value creation capability relative to the size of its revenues.
- Overall Observations
- Despite steadily increasing adjusted revenues, the company experienced a pronounced decline in market value added and MVA margin after 2020. The disparity between revenue growth and market value added reduction suggests external or internal challenges impacting market valuation and perceived economic profit. The steep fall in MVA and MVA margin in recent years highlights potential concerns about profitability, investment returns, or market perceptions of the company’s value-generating capacity moving forward.