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
Expedia Group 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 financial trajectory from 2017 to 2021 indicates a substantial expansion in shareholder wealth creation, as evidenced by the growth in Market Value Added (MVA). While the period began with a moderate surplus of market value over invested capital, the final two years of the analysis show a significant acceleration in the gap between the company's market valuation and the capital employed to generate its returns.
- Market Value Trends
- The market valuation exhibited an overall upward trend, rising from US$ 21,837 million in 2017 to US$ 40,762 million by the end of 2021. A marginal contraction occurred in 2019, where value decreased to US$ 23,890 million. However, this was followed by a sharp recovery and rapid escalation, with the market value increasing by approximately 70% between 2019 and 2021.
- Invested Capital Analysis
- Invested capital maintained a relatively stable and gradual growth pattern throughout the observed period. Starting at US$ 14,039 million in 2017, it reached US$ 17,498 million by 2021. The growth in invested capital remained consistent and linear, contrasting with the more volatile and aggressive movements seen in the market valuation.
- Market Value Added (MVA) Dynamics
- The MVA experienced significant fluctuations, starting at US$ 7,798 million in 2017 and peaking at US$ 23,264 million in 2021. A notable dip occurred in 2019, when MVA fell to US$ 7,729 million, aligning with the dip in market value. A pivot occurred in 2020, where MVA more than doubled to US$ 17,434 million, eventually reaching its period high in 2021. This trend indicates that the market's perception of the company's value grew at a rate far exceeding the actual capital investment required to operate the business.
The widening divergence between market value and invested capital suggests a strong increase in the company's perceived intangible value or future growth prospects. By 2021, the MVA represented a significantly larger proportion of the total market value compared to 2017, reflecting heightened investor confidence and a substantial premium attributed to the organization above its book-level investment.
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MVA Spread Ratio
Expedia Group 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 | 23,264) | 17,434) | 7,729) | 10,745) | 7,798) | |
| Invested capital2 | 17,498) | 15,765) | 16,161) | 14,424) | 14,039) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 132.95% | 110.58% | 47.82% | 74.50% | 55.54% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | 728.57% | — | — | — | — | |
| Home Depot Inc. | 631.50% | — | — | — | — | |
| Lowe’s Cos. Inc. | 457.91% | — | — | — | — | |
| TJX Cos. Inc. | 327.36% | — | — | — | — | |
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 × 23,264 ÷ 17,498 = 132.95%
4 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 reveals a significant expansion in shareholder value creation, characterized by a substantial increase in Market Value Added relative to the capital invested in the business.
- Market Value Added (MVA)
- MVA exhibited moderate volatility in the early period, rising from 7,798 million US$ in 2017 to 10,745 million US$ in 2018, before retreating to 7,729 million US$ in 2019. A sharp upward inflection occurred in 2020, with MVA climbing to 17,434 million US$ and further accelerating to 23,264 million US$ by December 31, 2021, representing a near threefold increase from the 2019 trough.
- Invested Capital
- Invested capital demonstrated a generally stable upward trend, increasing from 14,039 million US$ in 2017 to 17,498 million US$ in 2021. A slight contraction was noted in 2020, where capital decreased to 15,765 million US$ from a 2019 peak of 16,161 million US$, suggesting a period of capital optimization preceding the growth observed in 2021.
- MVA Spread Ratio
- The MVA spread ratio reflects a marked improvement in value efficiency over the five-year period. After fluctuating between 55.54% in 2017 and a low of 47.82% in 2019, the ratio experienced exponential growth. It surpassed the 100% threshold in 2020, reaching 110.58%, and concluded the period at 132.95% in 2021. This progression indicates that by the end of the analysis period, the market value added exceeded the total invested capital, signaling strong market confidence and an acceleration in value generation per unit of capital employed.
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MVA Margin
Expedia Group Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 23,264) | 17,434) | 7,729) | 10,745) | 7,798) | |
| Revenue | 8,598) | 5,199) | 12,067) | 11,223) | 10,060) | |
| Add: Increase (decrease) in deferred merchant bookings and deferred revenue | 2,575) | (2,721) | 1,309) | 1,146) | 645) | |
| Adjusted revenue | 11,173) | 2,478) | 13,376) | 12,369) | 10,705) | |
| Performance Ratio | ||||||
| MVA margin2 | 208.21% | 703.53% | 57.78% | 86.87% | 72.85% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Amazon.com Inc. | 312.93% | — | — | — | — | |
| Home Depot Inc. | 237.60% | — | — | — | — | |
| Lowe’s Cos. Inc. | 145.00% | — | — | — | — | |
| TJX Cos. Inc. | 227.93% | — | — | — | — | |
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 ÷ Adjusted revenue
= 100 × 23,264 ÷ 11,173 = 208.21%
3 Click competitor name to see calculations.
The period between 2017 and 2021 is characterized by a significant divergence between operational revenue performance and the market's valuation of added value. While adjusted revenue experienced extreme volatility, particularly during the 2020 fiscal year, Market Value Added (MVA) demonstrated a strong upward trajectory over the long term, culminating in a peak in 2021.
- Market Value Added (MVA)
- A general growth trend is observed in MVA over the five-year period. After fluctuating between 7.7 billion and 10.7 billion from 2017 to 2019, the value accelerated sharply in 2020 to 17.4 billion and continued to rise to 23.3 billion by the end of 2021. This suggests a substantial increase in the market's perception of the company's value relative to its invested capital, despite operational challenges.
- Adjusted Revenue
- Revenue exhibited steady growth from 2017 to 2019, peaking at 13.4 billion. A severe contraction occurred in 2020, with revenue plummeting to 2.5 billion, representing a significant operational decline. A robust recovery phase followed in 2021, with revenue returning to 11.2 billion, although it remained below the 2019 peak.
- MVA Margin
- The MVA margin remained relatively stable between 57.78% and 86.87% from 2017 through 2019. In 2020, the margin experienced an anomalous spike to 703.53%, a mathematical result of the simultaneous increase in MVA and the drastic collapse of adjusted revenue. By 2021, as revenue recovered, the margin moderated to 208.21%, though this figure remains significantly elevated compared to pre-2020 levels, indicating that the growth in market value outpaced the recovery of revenue.
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