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
Illumina Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
Between 2016 and 2020, a substantial and consistent increase in market value added was observed, reflecting significant value creation and strong investor confidence over the period.
- Market Value Trajectory
- The market value experienced a continuous upward trend, rising from 25,220 million US$ in 2016 to 72,765 million US$ by 2020. Growth was steady between 2016 and 2019, followed by a sharp acceleration in 2020, where the value increased by approximately 63% in a single year.
- Invested Capital Trends
- Invested capital grew moderately from 2,874 million US$ in 2016 to 4,997 million US$ in 2019. In 2020, a slight contraction occurred, with invested capital decreasing to 4,907 million US$. The disparity between the modest growth in capital expenditure and the aggressive growth in market valuation suggests a high efficiency in capital utilization.
- Market Value Added (MVA) Performance
- MVA demonstrated significant expansion, growing from 22,346 million US$ in 2016 to 67,858 million US$ in 2020. While a marginal decline was noted between 2018 and 2019, falling from 39,840 million US$ to 39,432 million US$, this was followed by a substantial surge in 2020. The widening gap between market value and invested capital indicates that the market assigned a premium to the company's future growth prospects and intellectual property far beyond the tangible capital invested in the business.
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MVA Spread Ratio
Illumina Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 67,858) | 39,432) | 39,840) | 30,279) | 22,346) | |
| Invested capital2 | 4,907) | 4,997) | 3,989) | 3,596) | 2,874) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 1,382.87% | 789.11% | 998.68% | 841.95% | 777.45% | |
| 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: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2020 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 67,858 ÷ 4,907 = 1,382.87%
4 Click competitor name to see calculations.
Between 2016 and 2020, there was a substantial increase in the market valuation of the entity relative to its invested capital, indicating strong investor confidence in future growth and value creation.
- Market Value Added (MVA)
- MVA experienced a consistent upward trajectory, rising from 22,346 million US dollars in 2016 to 67,858 million US dollars by 2020. While a marginal plateau occurred between 2018 and 2019, the period concluded with a significant acceleration in value added during the final year.
- Invested Capital
- The amount of invested capital grew steadily from 2,874 million US dollars in 2016 to a peak of 4,997 million US dollars in 2019, before stabilizing at 4,907 million US dollars in 2020. This represents a moderate expansion of the capital base compared to the more aggressive growth observed in market value.
- MVA Spread Ratio
- The MVA spread ratio demonstrated volatility, starting at 777.45% in 2016 and reaching a peak of 1,382.87% in 2020. A notable contraction occurred in 2019, where the ratio fell to 789.11% as invested capital continued to rise while MVA remained stagnant. However, a sharp recovery occurred in 2020, reflecting a disproportionate increase in market value relative to the capital employed.
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MVA Margin
Illumina Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 67,858) | 39,432) | 39,840) | 30,279) | 22,346) | |
| Revenue | 3,239) | 3,543) | 3,333) | 2,752) | 2,398) | |
| Performance Ratio | ||||||
| MVA margin2 | 2,095.02% | 1,112.96% | 1,195.33% | 1,100.24% | 931.69% | |
| 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: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 MVA. See details »
2 2020 Calculation
MVA margin = 100 × MVA ÷ Revenue
= 100 × 67,858 ÷ 3,239 = 2,095.02%
3 Click competitor name to see calculations.
The financial data indicates a substantial increase in market value added (MVA) from 2016 to 2020, reflecting a strong growth in the market's valuation of the company relative to its invested capital. While revenue demonstrated a general upward trend for most of the period, the growth in MVA significantly outpaced revenue growth, resulting in a sharp expansion of the MVA margin.
- Market Value Added (MVA) Trends
- MVA exhibited consistent growth between 2016 and 2018, rising from 22,346 million US$ to 39,840 million US$. A period of relative stability occurred in 2019 with a slight decrease to 39,432 million US$, followed by a significant surge in 2020, where MVA reached 67,858 million US$. This represents a total increase of approximately 203% over the five-year duration.
- Revenue Performance
- Revenue grew steadily from 2,398 million US$ in 2016 to a peak of 3,543 million US$ in 2019. However, a reversal occurred in 2020, with revenue declining to 3,239 million US$. This indicates a contraction in top-line performance during the final year of the analyzed period.
- MVA Margin Analysis
- The MVA margin increased from 931.69% in 2016 to 2,095.02% in 2020. The margin trended upward through 2018, experienced a moderate dip in 2019 to 1,112.96%, and then nearly doubled in 2020. The sharp rise in the MVA margin during 2020 is particularly noteworthy as it occurred simultaneously with a decrease in revenue, suggesting that the increase in market valuation was driven by factors independent of current annual sales, such as increased investor confidence in future growth prospects or strategic positioning.
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