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
ON Semiconductor Corp., MVA calculation
US$ in thousands
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 »
The analysis of Market Value Added (MVA) reveals a period of substantial value creation between 2019 and 2022, followed by a moderate contraction in 2023. The divergence between the fair market value and the capital invested indicates a significant increase in shareholder wealth creation over the observed five-year period, although the momentum shifted in the final year.
- Market Value Trends
- The market value experienced a consistent and aggressive upward trajectory from December 31, 2019, to December 31, 2022, rising from approximately $12.89 billion to a peak of $38.68 billion. This represents a nearly threefold increase in valuation. A slight correction was observed in 2023, with the value adjusting to $37.44 billion.
- Invested Capital Expansion
- Invested capital remained relatively stable between 2019 and 2020 before entering a phase of steady growth. From $6.86 billion in 2019, the invested capital increased to $10.93 billion by the end of 2023. The acceleration of capital investment became most pronounced between 2021 and 2023, reflecting an increase in the resource base employed by the organization.
- Market Value Added (MVA) Performance
- The MVA expanded rapidly from $6.03 billion in 2019 to a peak of $29.31 billion in 2022. This growth demonstrates that the market's perception of the company's future earning potential far outpaced the actual capital invested. In 2023, however, the MVA declined to $26.51 billion. This contraction resulted from the simultaneous occurrence of a decrease in market value and a continued increase in invested capital, indicating a narrowing of the gap between market valuation and the cost of capital employed.
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MVA Spread Ratio
ON Semiconductor Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 26,509,830) | 29,306,320) | 21,924,222) | 14,449,123) | 6,028,172) | |
| Invested capital2 | 10,925,400) | 9,371,400) | 7,560,500) | 6,889,500) | 6,857,500) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 242.64% | 312.72% | 289.98% | 209.73% | 87.91% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 370.13% | 119.87% | 2,219.60% | — | — | |
| Analog Devices Inc. | 117.77% | 103.56% | 117.94% | 210.89% | — | |
| Applied Materials Inc. | 671.06% | 515.59% | 815.05% | 555.54% | — | |
| Broadcom Inc. | 780.11% | 327.90% | 373.48% | 237.62% | — | |
| Intel Corp. | 136.50% | 56.17% | 138.47% | — | — | |
| KLA Corp. | 749.49% | 664.85% | 735.96% | — | — | |
| Lam Research Corp. | 511.21% | 404.85% | 617.13% | — | — | |
| Marvell Technology Inc. | 97.37% | 200.17% | 270.10% | — | — | |
| Micron Technology Inc. | 66.27% | 17.46% | 81.70% | — | — | |
| NVIDIA Corp. | 2,593.21% | 3,533.65% | 2,455.53% | — | — | |
| Qualcomm Inc. | 331.81% | 372.61% | 739.14% | 815.45% | — | |
| Texas Instruments Inc. | 565.70% | 853.39% | 887.48% | — | — | |
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 × 26,509,830 ÷ 10,925,400 = 242.64%
4 Click competitor name to see calculations.
Between 2019 and 2023, a significant period of value expansion was observed, characterized by a rapid increase in market value added that peaked in 2022. While the company continued to expand its capital base throughout the entire period, the efficiency of value creation relative to that investment experienced a sharp rise followed by a moderate contraction in the final year.
- Market Value Added (MVA)
- A strong upward trend is evident from 2019 to 2022, with MVA growing from $6,028,172 thousand to a peak of $29,306,320 thousand. This represents a substantial increase in the market's valuation of the company beyond its invested capital. In 2023, a reversal occurred, as MVA declined to $26,509,830 thousand.
- Invested Capital
- Invested capital exhibited consistent growth over the five-year horizon. The capital base expanded from $6,857,500 thousand in 2019 to $10,925,400 thousand in 2023. The growth was relatively flat between 2019 and 2020, followed by an accelerated increase from 2021 onward, indicating a sustained commitment to scaling operations and infrastructure.
- MVA Spread Ratio
- The MVA spread ratio experienced an aggressive acceleration, rising from 87.91% in 2019 to a peak of 312.72% in 2022. This trajectory indicates that the market value added grew at a significantly faster rate than the invested capital during this window. However, the ratio decreased to 242.64% in 2023, a result of the simultaneous decline in MVA and the continued increase in invested capital.
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MVA Margin
ON Semiconductor Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 26,509,830) | 29,306,320) | 21,924,222) | 14,449,123) | 6,028,172) | |
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Performance Ratio | ||||||
| MVA margin2 | 321.21% | 351.98% | 325.29% | 274.96% | 109.25% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | 944.62% | 297.25% | 836.71% | — | — | |
| Analog Devices Inc. | 422.86% | 388.08% | 757.72% | 685.43% | — | |
| Applied Materials Inc. | 449.88% | 297.74% | 520.10% | 422.74% | — | |
| Broadcom Inc. | 1,364.98% | 613.40% | 879.63% | 656.02% | — | |
| Intel Corp. | 231.83% | 78.99% | 155.07% | — | — | |
| KLA Corp. | 595.34% | 562.11% | 725.36% | — | — | |
| Lam Research Corp. | 448.84% | 298.83% | 497.72% | — | — | |
| Marvell Technology Inc. | 329.04% | 893.35% | 828.99% | — | — | |
| Micron Technology Inc. | 225.16% | 29.56% | 135.02% | — | — | |
| NVIDIA Corp. | 2,051.63% | 2,368.66% | 1,919.74% | — | — | |
| Qualcomm Inc. | 291.70% | 248.18% | 445.16% | 615.38% | — | |
| Texas Instruments Inc. | 729.45% | 748.35% | 793.86% | — | — | |
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 ÷ Revenue
= 100 × 26,509,830 ÷ 8,253,000 = 321.21%
3 Click competitor name to see calculations.
Between 2019 and 2023, the financial metrics indicate a period of significant expansion in market value creation relative to revenue, peaking in 2022 before experiencing a moderate correction in 2023.
- Market Value Added (MVA) Trends
- A strong upward trajectory is observed from 2019 to 2022, during which the MVA increased from US$ 6,028,172 thousand to a peak of US$ 29,306,320 thousand. This growth suggests a substantial increase in the premium the market assigned to the company over its invested capital. A slight retraction occurred in 2023, with the value declining to US$ 26,509,830 thousand.
- Revenue Performance
- Revenue exhibited a slight contraction in 2020 before entering a period of growth through 2022, rising from US$ 5,255,000 thousand to US$ 8,326,200 thousand. The 2023 period showed a stabilization of revenue at US$ 8,253,000 thousand, indicating a plateau in top-line growth that corresponds with the decline in market value metrics.
- MVA Margin Analysis
- The MVA margin experienced a sharp increase from 109.25% in 2019 to 274.96% in 2020, continuing its ascent to a peak of 351.98% in 2022. This trend indicates that market valuation grew at a much faster rate than revenue during this interval. In 2023, the margin moderated to 321.21%, reflecting a decrease in the ratio of market value added to annual revenue, though it remains significantly higher than 2019 levels.
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