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
Diamondback Energy Inc., MVA calculation
US$ in millions
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 Market Value Added (MVA) for Diamondback Energy exhibited significant volatility between 2017 and 2021, reflecting fluctuations in both market capitalization and the total capital invested in the business. After an initial decline and a period of negative value creation, the company achieved a substantial recovery by the end of the analyzed period.
- Market Value Trends
- The fair market value experienced an overall upward trajectory, increasing from 14,120 million USD in 2017 to 30,995 million USD in 2021. While a contraction was observed in 2019, the market value grew sharply in 2021, representing the highest valuation in the five-year sequence.
- Invested Capital Dynamics
- A substantial increase in invested capital occurred between 2017 and 2018, rising from 7,167 million USD to 20,304 million USD. This rapid expansion in the capital base peaked at 22,002 million USD in 2019. Following a reduction to 16,329 million USD in 2020, the invested capital rose again to 21,230 million USD by 2021.
- MVA Performance and Value Creation
- The MVA fluctuated from 6,953 million USD in 2017 to a low of negative 5,404 million USD in 2019, signaling a period where the market valuation was lower than the capital invested in the company. This negative trend was reversed in 2020, and by 2021, MVA reached a peak of 9,765 million USD, indicating a strong recovery in the market's perception of the company's ability to create value above its invested capital.
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MVA Spread Ratio
Diamondback Energy 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 millions) | ||||||
| Market value added (MVA)1 | 9,765) | 1,807) | (5,404) | 1,869) | 6,953) | |
| Invested capital2 | 21,230) | 16,329) | 22,002) | 20,304) | 7,167) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 45.99% | 11.06% | -24.56% | 9.21% | 97.01% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 54.49% | — | — | — | — | |
| ConocoPhillips | 86.17% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 42.25% | — | — | — | — | |
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 × 9,765 ÷ 21,230 = 45.99%
4 Click competitor name to see calculations.
The financial performance between 2017 and 2021 is characterized by extreme volatility in shareholder value creation, moving from high positive contributions to a period of value destruction before achieving a significant recovery.
- Market Value Added (MVA)
- A significant fluctuation is observed in the MVA, which reached its highest point of 9,765 million USD in 2021. A critical decline occurred in 2019, where the MVA fell to -5,404 million USD, signifying that the market valuation of the company was lower than the total capital invested during that period.
- Invested Capital Trends
- Invested capital experienced a rapid expansion from 7,167 million USD in 2017 to a peak of 22,002 million USD in 2019. Following a contraction to 16,329 million USD in 2020, the capital base increased again to 21,230 million USD by 2021, indicating a phase of aggressive growth followed by a period of realignment.
- MVA Spread Ratio Analysis
- The MVA spread ratio mirrored the volatility of the absolute MVA, starting at 97.01% in 2017. The ratio collapsed to -24.56% in 2019, coinciding with the period of highest invested capital, suggesting that the capital expansion did not initially produce proportional market value. The subsequent rebound to 45.99% by 2021 demonstrates a substantial improvement in the efficiency of value generation relative to the capital employed.
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MVA Margin
Diamondback Energy 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 millions) | ||||||
| Market value added (MVA)1 | 9,765) | 1,807) | (5,404) | 1,869) | 6,953) | |
| Revenue from contracts with customers | 6,747) | 2,756) | 3,887) | 2,130) | 1,186) | |
| Performance Ratio | ||||||
| MVA margin2 | 144.73% | 65.55% | -139.03% | 87.77% | 586.10% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 67.80% | — | — | — | — | |
| ConocoPhillips | 143.57% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 41.64% | — | — | — | — | |
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 from contracts with customers
= 100 × 9,765 ÷ 6,747 = 144.73%
3 Click competitor name to see calculations.
The financial period from 2017 to 2021 exhibits substantial volatility in market value creation, characterized by a severe contraction in 2019 and a robust recovery by the end of 2021. While revenue showed a general upward trajectory, the market valuation of the company's added value fluctuated significantly, reflecting high sensitivity to external market conditions.
- Market Value Added (MVA) Performance
- MVA experienced a sharp decline from US$ 6,953 million in 2017 to a deficit of US$ 5,404 million in 2019. This contraction indicates a period where the market value of the firm fell below its invested capital. A subsequent reversal occurred in 2020, with MVA returning to positive territory at US$ 1,807 million, eventually peaking at US$ 9,765 million in 2021, representing the highest level recorded in the analyzed period.
- Revenue Growth Trajectory
- Revenue demonstrated a general expansion, increasing from US$ 1,186 million in 2017 to US$ 6,747 million in 2021. An interim peak was reached in 2019 at US$ 3,887 million, followed by a temporary contraction to US$ 2,756 million in 2020. The period concluded with a significant surge in revenue during 2021.
- MVA Margin Volatility
- The MVA margin reflected the instability of the absolute MVA figures, starting at 586.10% in 2017 before plummeting to -139.03% in 2019. This negative margin coincided with the lowest point of market value added. A recovery phase is observed from 2020 onwards, with the margin rising to 65.55% and further increasing to 144.73% by 2021, suggesting a restoration of market confidence and improved value creation relative to revenue.
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