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
Roper Technologies Inc., MVA calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
An analysis of the financial metrics from 2018 to 2022 reveals a period of significant expansion in both market valuation and capital investment, culminating in a peak of value creation in 2021 followed by a contraction in 2022.
- Market Value Trends
- The fair market value exhibited a steady upward trajectory for the majority of the period, rising from approximately 38.25 billion US dollars in 2018 to a peak of 54.74 billion US dollars in 2021. This represents a substantial increase in investor valuation over four years. However, a reversal occurred in 2022, with the market value declining to 51.77 billion US dollars.
- Invested Capital Growth
- Invested capital demonstrated a consistent and aggressive growth pattern, increasing from 14.79 billion US dollars in 2018 to 26.22 billion US dollars by the end of 2022. The most significant jump occurred between 2019 and 2020, where capital increased by approximately 5.85 billion US dollars. This suggests a sustained period of capital deployment or acquisition activity.
- Market Value Added (MVA) Performance
- The MVA, which measures the difference between the market value and the invested capital, grew steadily from 2018 (23.47 billion US dollars) to a peak in 2021 (32.23 billion US dollars), indicating that the market valued the company's growth and future prospects well above its book investment. In 2022, a sharp contraction in MVA was observed, falling to 25.56 billion US dollars. This decline was driven by a dual impact: a reduction in overall market value coupled with a simultaneous increase in invested capital.
- Value Creation Dynamics
- The data indicates that between 2018 and 2021, market value grew at a rate that outpaced the growth of invested capital, leading to an expansion of the MVA. Conversely, the 2022 fiscal year marked a shift where the cost of capital investment increased while the market's valuation of that capital diminished, resulting in a notable reduction in the added value generated for shareholders.
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MVA Spread Ratio
Roper Technologies Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 25,556,403) | 32,230,821) | 27,731,010) | 25,979,669) | 23,465,945) | |
| Invested capital2 | 26,216,800) | 22,504,600) | 23,002,900) | 17,154,600) | 14,785,177) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 97.48% | 143.22% | 120.55% | 151.44% | 158.71% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 5,157.62% | 5,626.48% | — | — | — | |
| Arista Networks Inc. | 1,226.33% | 1,872.91% | — | — | — | |
| Cisco Systems Inc. | 214.20% | 329.31% | — | — | — | |
| Dell Technologies Inc. | 31.48% | 53.40% | — | — | — | |
| Lumentum Holdings Inc. | 196.72% | 256.49% | — | — | — | |
| Super Micro Computer Inc. | 91.12% | 50.17% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 25,556,403 ÷ 26,216,800 = 97.48%
4 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 is characterized by a period of expansion in market value added (MVA) and invested capital, followed by a notable contraction in value creation efficiency by the conclusion of the period.
- Market Value Added (MVA)
- MVA exhibited a consistent upward trajectory from 2018 through 2021, rising from 23.47 billion to a peak of 32.23 billion. This growth suggests a strengthening of market confidence and perceived value creation during this timeframe. However, this trend reversed sharply in 2022, with MVA falling to 25.56 billion, indicating a significant reduction in the premium the market assigned to the company over its invested capital.
- Invested Capital
- The invested capital base grew steadily over the five-year period, increasing from 14.79 billion in 2018 to 26.22 billion in 2022. A substantial increase is observed between 2019 and 2020, where the capital base expanded by approximately 5.85 billion. Despite a marginal dip in 2021, the overall trend reflects a continuous commitment to increasing the capital deployed within the business.
- MVA Spread Ratio
- The MVA spread ratio reveals a general decline in the efficiency of value creation relative to the capital invested. The ratio began at a high of 158.71% in 2018 and trended downward to 120.55% by 2020. While a temporary recovery to 143.22% occurred in 2021, the ratio dropped precipitously to 97.48% in 2022. The descent below the 100% threshold in 2022 signifies a critical shift, where the market's valuation of the company's added value no longer exceeded the total invested capital to the same extent as in previous years.
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MVA Margin
Roper Technologies Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 25,556,403) | 32,230,821) | 27,731,010) | 25,979,669) | 23,465,945) | |
| Net revenues | 5,371,800) | 5,777,800) | 5,527,100) | 5,366,800) | 5,191,200) | |
| Add: Increase (decrease) in deferred revenue | 306,000) | 172,600) | 172,700) | 157,300) | 109,500) | |
| Adjusted net revenues | 5,677,800) | 5,950,400) | 5,699,800) | 5,524,100) | 5,300,700) | |
| Performance Ratio | ||||||
| MVA margin2 | 450.11% | 541.66% | 486.53% | 470.30% | 442.70% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Apple Inc. | 609.53% | 653.71% | — | — | — | |
| Arista Networks Inc. | 844.93% | 1,097.06% | — | — | — | |
| Cisco Systems Inc. | 240.26% | 367.17% | — | — | — | |
| Dell Technologies Inc. | 16.47% | 45.88% | — | — | — | |
| Lumentum Holdings Inc. | 287.34% | 289.28% | — | — | — | |
| Super Micro Computer Inc. | 38.75% | 18.09% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenues
= 100 × 25,556,403 ÷ 5,677,800 = 450.11%
3 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a period of consistent growth in market value and revenue efficiency, peaking in 2021, followed by a notable contraction in 2022.
- Market Value Added (MVA) Trajectory
- Market Value Added exhibited a steady upward trend for four consecutive years, rising from 23.47 billion US$ in 2018 to a peak of 32.23 billion US$ in 2021. This expansion indicates a significant increase in the market's valuation of the organization above its invested capital. However, this trend reversed in 2022, with MVA declining to 25.56 billion US$, effectively erasing the gains achieved between 2019 and 2020.
- Adjusted Net Revenue Correlation
- Adjusted net revenues followed a growth trajectory similar to MVA through 2021, increasing from 5.30 billion US$ in 2018 to a high of 5.95 billion US$ in 2021. In 2022, revenues experienced a contraction to 5.68 billion US$. The simultaneous decline in both revenues and market value suggests that the 2022 reduction in valuation was mirrored by a decrease in top-line performance.
- MVA Margin Analysis
- The MVA margin showed consistent improvement from 442.70% in 2018 to a peak of 541.66% in 2021, signifying that the market attributed progressively more value to each dollar of revenue generated during this period. The margin subsequently dropped to 450.11% in 2022, reflecting a decrease in value creation efficiency relative to revenue, bringing the ratio back to levels approximately equivalent to those observed in 2019.
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