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
Microchip Technology Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial trajectory from 2017 to 2022 demonstrates a substantial expansion in shareholder value creation, characterized by a significant increase in Market Value Added (MVA) despite fluctuations in the underlying capital base.
- Market Value Trends
- The market capitalization exhibited a consistent upward trajectory for the majority of the period, increasing from $24.1 billion in 2017 to a peak of $49.5 billion in 2021. Although a moderate decline to $45.2 billion was recorded by March 31, 2022, the terminal valuation remains significantly higher than the initial levels observed at the start of the period.
- Invested Capital Movements
- Invested capital showed a marked increase in 2019, rising sharply from $5.1 billion in 2018 to $14.7 billion. Following this peak, a steady downward trend was observed over the subsequent three years, with invested capital declining to $12.0 billion by 2022. This pattern suggests a period of significant capital expansion followed by a phase of capital optimization or reduction.
- Market Value Added (MVA) Performance
- MVA remained positive throughout the entire duration, indicating that the company consistently generated a market value exceeding its invested capital. A temporary dip in MVA occurred in 2019, falling to $17.8 billion as a direct result of the surge in invested capital. However, a rapid acceleration in value creation followed, with MVA reaching a peak of $36.8 billion in 2021 before settling at $33.3 billion in 2022.
The overall analysis reveals a strong capacity for value creation. The divergence between the declining invested capital and the sustained high market valuation from 2019 to 2022 contributed to a substantial increase in MVA, which nearly doubled from its 2017 level of $18.0 billion to $33.3 billion by 2022.
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MVA Spread Ratio
Microchip Technology Inc., MVA spread ratio calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 33,271,602) | 36,810,014) | 19,047,000) | 17,821,242) | 21,843,306) | 18,035,866) | |
| Invested capital2 | 11,963,600) | 12,643,700) | 13,725,600) | 14,715,398) | 5,149,468) | 6,087,016) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 278.11% | 291.13% | 138.77% | 121.11% | 424.19% | 296.30% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 119.87% | 2,219.60% | — | — | — | — | |
| Analog Devices Inc. | 103.56% | 117.94% | 210.89% | — | — | — | |
| Applied Materials Inc. | 515.59% | 815.05% | 555.54% | — | — | — | |
| Broadcom Inc. | 327.90% | 373.48% | 237.62% | — | — | — | |
| Intel Corp. | 56.17% | 138.47% | — | — | — | — | |
| KLA Corp. | 664.85% | 735.96% | — | — | — | — | |
| Lam Research Corp. | 404.85% | 617.13% | — | — | — | — | |
| Marvell Technology Inc. | 200.17% | 270.10% | — | — | — | — | |
| Micron Technology Inc. | 17.46% | 81.70% | — | — | — | — | |
| NVIDIA Corp. | 3,533.65% | 2,455.53% | — | — | — | — | |
| Qualcomm Inc. | 372.61% | 739.14% | 815.45% | — | — | — | |
| Texas Instruments Inc. | 853.39% | 887.48% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 33,271,602 ÷ 11,963,600 = 278.11%
4 Click competitor name to see calculations.
The financial trajectory between 2017 and 2022 is characterized by significant volatility in value creation and capital deployment, culminating in a substantial increase in total market value added despite fluctuations in the underlying capital base.
- Market Value Added (MVA)
- MVA exhibited a general upward trend over the observed period, starting at 18.04 billion USD in 2017 and reaching a peak of 36.81 billion USD in 2021. Although a moderate contraction occurred in 2019, the subsequent growth leading into 2021 indicates a strong expansion in the market's valuation of the company's future earning potential relative to the capital invested.
- Invested Capital
- A pivotal shift in the capital structure was observed in 2019, where invested capital increased sharply from 5.15 billion USD in 2018 to 14.72 billion USD. This surge represents a nearly threefold increase in a single year. From 2020 through 2022, a steady downward trend followed, with invested capital declining to 11.96 billion USD, suggesting a transition from a heavy investment phase toward capital optimization.
- MVA Spread Ratio
- The MVA spread ratio experienced extreme fluctuations, peaking at 424.19% in 2018 before dropping precipitously to 121.11% in 2019. This decline correlates directly with the spike in invested capital, which diluted the ratio of value added per unit of capital. A strong recovery was observed thereafter, with the ratio climbing back to 291.13% in 2021 and stabilizing at 278.11% in 2022, signaling that market value growth significantly outpaced the capital requirements in the latter years of the analysis.
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MVA Margin
Microchip Technology Inc., MVA margin calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 33,271,602) | 36,810,014) | 19,047,000) | 17,821,242) | 21,843,306) | 18,035,866) | |
| Net sales | 6,820,900) | 5,438,400) | 5,274,200) | 5,349,500) | 3,980,800) | 3,407,807) | |
| Add: Increase (decrease) in deferred revenue | 117,600) | —) | —) | —) | —) | —) | |
| Adjusted net sales | 6,938,500) | 5,438,400) | 5,274,200) | 5,349,500) | 3,980,800) | 3,407,807) | |
| Performance Ratio | |||||||
| MVA margin2 | 479.52% | 676.85% | 361.14% | 333.14% | 548.72% | 529.25% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Advanced Micro Devices Inc. | 297.25% | 836.71% | — | — | — | — | |
| Analog Devices Inc. | 388.08% | 757.72% | 685.43% | — | — | — | |
| Applied Materials Inc. | 297.74% | 520.10% | 422.74% | — | — | — | |
| Broadcom Inc. | 613.40% | 879.63% | 656.02% | — | — | — | |
| Intel Corp. | 78.99% | 155.07% | — | — | — | — | |
| KLA Corp. | 562.11% | 725.36% | — | — | — | — | |
| Lam Research Corp. | 298.83% | 497.72% | — | — | — | — | |
| Marvell Technology Inc. | 893.35% | 828.99% | — | — | — | — | |
| Micron Technology Inc. | 29.56% | 135.02% | — | — | — | — | |
| NVIDIA Corp. | 2,368.66% | 1,919.74% | — | — | — | — | |
| Qualcomm Inc. | 248.18% | 445.16% | 615.38% | — | — | — | |
| Texas Instruments Inc. | 748.35% | 793.86% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × 33,271,602 ÷ 6,938,500 = 479.52%
3 Click competitor name to see calculations.
An analysis of the financial performance from March 31, 2017, to March 31, 2022, reveals a general upward trajectory in both Market Value Added (MVA) and adjusted net sales, characterized by significant volatility in the MVA margin. While the absolute market value grew substantially over the period, the efficiency of value creation relative to sales experienced several fluctuations.
- Market Value Added (MVA) Trends
- MVA exhibited an overall increase, rising from 18,035,866 thousand USD in 2017 to 33,271,602 thousand USD by 2022. A notable peak occurred on March 31, 2021, when the value reached 36,810,014 thousand USD, representing a significant surge from the previous year's 19,047,000 thousand USD. This indicates a substantial increase in the market's valuation of the company's future growth potential during that period, followed by a moderate correction in 2022.
- Adjusted Net Sales Growth
- Adjusted net sales demonstrated a consistent growth pattern, increasing from 3,407,807 thousand USD in 2017 to 6,938,500 thousand USD in 2022. The most significant growth phases were observed between 2018 and 2019 and again between 2021 and 2022. This steady expansion in revenue provided a larger base for value creation, although the pace of sales growth did not always align linearly with the growth of market value.
- MVA Margin Volatility
- The MVA margin showed considerable instability over the six-year window. The margin peaked at 676.85% in 2021, coinciding with the spike in MVA. Conversely, a sharp decline was recorded in 2019, where the margin dropped to 333.14% despite a significant increase in adjusted net sales. This suggests that in 2019, revenue growth outpaced the increase in market value, leading to a contraction in the margin. By 2022, the margin settled at 479.52%, reflecting a normalization as sales reached their period high of 6,938,500 thousand USD while MVA experienced a slight decrease.
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