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
O’Reilly Automotive Inc., MVA calculation
US$ in thousands
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 »
Between December 31, 2017, and December 31, 2021, a consistent upward trajectory in market valuation and shareholder value creation is evident. The growth in market capitalization has significantly outpaced the fluctuations in invested capital, resulting in a substantial expansion of the market value added over the five-year period.
- Market Value Trends
- The market capitalization experienced significant growth, increasing from US$ 25,425,651 thousand in 2017 to US$ 49,362,742 thousand by the end of 2021. Although a slight contraction occurred between 2018 and 2019, the subsequent recovery and acceleration through 2021 indicate strong investor confidence and a substantial increase in the perceived fair value of the entity.
- Invested Capital Dynamics
- Invested capital remained relatively stable, fluctuating within a narrow range between US$ 5.44 billion and US$ 6.20 billion. A gradual increase was observed from 2017 through 2020, followed by a reduction to US$ 5,766,861 thousand in 2021. This suggests a controlled approach to capital expenditure and a potential optimization of the capital base toward the end of the period.
- Market Value Added (MVA) Performance
- The MVA demonstrated robust growth, rising from US$ 19,984,960 thousand in 2017 to US$ 43,595,881 thousand in 2021. The fact that the MVA consistently and significantly exceeded the invested capital indicates that the company created substantial wealth for its shareholders. The expansion of MVA is primarily driven by the appreciation in market value rather than changes in the capital invested, reflecting high market expectations for future profitability and efficient management of resources.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
MVA Spread Ratio
O’Reilly Automotive 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 thousands) | ||||||
| Market value added (MVA)1 | 43,595,881) | 31,854,070) | 27,621,392) | 28,587,268) | 19,984,960) | |
| Invested capital2 | 5,766,861) | 6,200,132) | 6,076,741) | 5,606,204) | 5,440,691) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 755.97% | 513.76% | 454.54% | 509.92% | 367.32% | |
| 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 × 43,595,881 ÷ 5,766,861 = 755.97%
4 Click competitor name to see calculations.
An analysis of value creation metrics from 2017 to 2021 reveals a significant upward trajectory in market valuation relative to the capital invested in the business. The overall trend indicates an accelerating capacity to generate shareholder wealth well in excess of the invested capital base.
- Market Value Added (MVA)
- A consistent growth pattern is observed in the MVA, which rose from 19,984,960 thousand US dollars in 2017 to 43,595,881 thousand US dollars by 2021. While a marginal contraction occurred in 2019, the subsequent recovery and acceleration in 2020 and 2021 demonstrate a strong expansion in the market's perception of the entity's future earning potential.
- Invested Capital
- Invested capital exhibited moderate growth between 2017 and 2020, peaking at 6,200,132 thousand US dollars. However, a reversal is noted in 2021, where invested capital decreased to 5,766,861 thousand US dollars. This reduction in the capital base, occurring simultaneously with a peak in market value, suggests increased capital efficiency.
- MVA Spread Ratio
- The MVA spread ratio shows substantial volatility but maintains a strong positive trend, starting at 367.32% in 2017 and reaching a peak of 755.97% in 2021. The dip to 454.54% in 2019 corresponds with the slight decline in MVA during that period. The sharp increase in 2021 is a result of the combined effect of the highest recorded MVA and a simultaneous reduction in invested capital, indicating a highly favorable spread between the return on invested capital and the cost of capital.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
MVA Margin
O’Reilly Automotive 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 thousands) | ||||||
| Market value added (MVA)1 | 43,595,881) | 31,854,070) | 27,621,392) | 28,587,268) | 19,984,960) | |
| Sales | 13,327,563) | 11,604,493) | 10,149,985) | 9,536,428) | 8,977,726) | |
| Add: Increase (decrease) in deferred revenue liability | (1,100) | 400) | (200) | (400) | (100) | |
| Adjusted sales | 13,326,463) | 11,604,893) | 10,149,785) | 9,536,028) | 8,977,626) | |
| Performance Ratio | ||||||
| MVA margin2 | 327.14% | 274.49% | 272.14% | 299.78% | 222.61% | |
| 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 sales
= 100 × 43,595,881 ÷ 13,326,463 = 327.14%
3 Click competitor name to see calculations.
The financial data from 2017 to 2021 reveals a substantial expansion in market valuation relative to the invested capital and sales performance. There is a clear upward trajectory in both absolute market value added and the efficiency with which sales generate that value.
- Market Value Added (MVA) Trends
- Market Value Added experienced significant growth over the five-year period, increasing from 19,984,960 thousand US dollars in 2017 to 43,595,881 thousand US dollars by 2021. While a minor contraction occurred in 2019, the overall trend remained positive, with the most pronounced increase occurring between 2020 and 2021, where value added rose by approximately 11.7 billion US dollars.
- Adjusted Sales Growth
- Adjusted sales demonstrated consistent year-over-year growth throughout the analyzed timeframe. Revenue rose steadily from 8,977,626 thousand US dollars in 2017 to 13,326,463 thousand US dollars in 2021. This linear growth in sales suggests a stable expansion of the operational base, providing a foundation for the corresponding increase in market valuation.
- MVA Margin Analysis
- The MVA margin, which relates the market value added to adjusted sales, reflects high market confidence and value creation. The margin began at 222.61% in 2017 and peaked at 327.14% in 2021. A notable surge was observed in 2018, reaching 299.78%, followed by a period of relative stabilization between 2019 and 2020. The final increase in 2021 indicates that market valuation grew at a faster rate than sales, suggesting an improvement in the perceived quality of earnings or future growth prospects.
In summary, the alignment of increasing adjusted sales with a rapidly growing MVA and an expanding MVA margin indicates a period of strong value creation. The market has increasingly rewarded the organization's performance, resulting in a valuation that significantly exceeds the capital invested relative to its sales volume.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?