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
Ross Stores Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 Fair value of debt. See details »
2 Invested capital. See details »
The Market Value Added (MVA) demonstrated a general upward trajectory from 2017 through 2021, followed by a significant contraction in 2022. The period is characterized by substantial volatility in market capitalization relative to a more consistent, though accelerating, growth in invested capital.
- Market Value Volatility
- Market capitalization increased steadily from $29.02 billion in 2017 to a high of $38.16 billion in 2019. A temporary decline occurred in 2020, with value dropping to $34.46 billion, which was followed by a sharp surge to a peak of $48.94 billion in 2021. By 2022, a correction occurred, bringing the market value down to $39.30 billion.
- Invested Capital Expansion
- Invested capital showed modest growth between 2017 and 2020, moving from $6.02 billion to $6.81 billion. A more aggressive expansion in the capital base was observed in 2021 and 2022, with values rising to $8.77 billion and $9.25 billion, respectively.
- MVA Performance and Value Creation
- MVA grew from $23.00 billion in 2017 to a peak of $40.17 billion in 2021, indicating that the market perceived the company's value to be significantly higher than the capital contributed. However, the 2022 fiscal year experienced a sharp contraction in MVA to $30.05 billion. This decline was the result of a dual impact: a reduction in overall market valuation occurring simultaneously with an increase in the amount of invested capital.
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MVA Spread Ratio
Ross Stores Inc., MVA spread ratio calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 30,052,092) | 40,168,765) | 27,655,064) | 31,271,884) | 25,838,959) | 22,997,907) | |
| Invested capital2 | 9,245,498) | 8,769,230) | 6,807,292) | 6,884,089) | 6,397,687) | 6,022,627) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 325.05% | 458.06% | 406.26% | 454.26% | 403.88% | 381.86% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | 342.01% | 728.57% | — | — | — | — | |
| Home Depot Inc. | 681.54% | 631.50% | — | — | — | — | |
| Lowe’s Cos. Inc. | 587.76% | 457.91% | — | — | — | — | |
| TJX Cos. Inc. | 333.18% | 327.36% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 30,052,092 ÷ 9,245,498 = 325.05%
4 Click competitor name to see calculations.
An analysis of the financial metrics from 2017 to 2022 reveals a period of significant expansion in market valuation, followed by a notable correction in the final year. The relationship between invested capital and market value added demonstrates a high capacity for value creation, although this efficiency experienced a sharp decline in 2022.
- Market Value Added (MVA)
- MVA exhibited a general upward trajectory for the majority of the period, rising from 22,997,907 thousand USD in 2017 to a peak of 40,168,765 thousand USD in 2021. A temporary contraction occurred in 2020, where value decreased to 27,655,064 thousand USD, before recovering strongly. However, 2022 saw a substantial reduction in MVA to 30,052,092 thousand USD, representing a significant retreat from the 2021 highs.
- Invested Capital
- Invested capital showed consistent growth over the six-year horizon. Starting at 6,022,627 thousand USD in 2017, the figure rose steadily to 6,807,292 thousand USD by 2020. A significant increase in capital allocation occurred between 2020 and 2021, with invested capital jumping to 8,769,230 thousand USD, and continuing its ascent to 9,245,498 thousand USD in 2022.
- MVA Spread Ratio
- The MVA spread ratio reflects the market's valuation of the company relative to the capital invested. The ratio trended upward from 381.86% in 2017 to a peak of 458.06% in 2021, indicating that the market was adding value at a rate far exceeding the growth of invested capital. In 2022, the ratio dropped sharply to 325.05%, the lowest level in the analyzed period. This decline is attributable to the simultaneous increase in invested capital and the decrease in total market value added, suggesting a reduction in the efficiency of value creation from a market perspective.
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MVA Margin
Ross Stores Inc., MVA margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 30,052,092) | 40,168,765) | 27,655,064) | 31,271,884) | 25,838,959) | 22,997,907) | |
| Sales | 18,916,244) | 12,531,565) | 16,039,073) | 14,983,541) | 14,134,732) | 12,866,757) | |
| Performance Ratio | |||||||
| MVA margin2 | 158.87% | 320.54% | 172.42% | 208.71% | 182.80% | 178.74% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Amazon.com Inc. | 178.50% | 312.93% | — | — | — | — | |
| Home Depot Inc. | 216.66% | 237.60% | — | — | — | — | |
| Lowe’s Cos. Inc. | 159.89% | 145.00% | — | — | — | — | |
| TJX Cos. Inc. | 135.17% | 227.93% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Sales
= 100 × 30,052,092 ÷ 18,916,244 = 158.87%
3 Click competitor name to see calculations.
The financial performance from 2017 to 2022 is characterized by significant volatility in market valuation relative to sales. While the company experienced general growth in revenue over the long term, the market value added (MVA) and the MVA margin exhibited non-linear trends, most notably a sharp divergence between operational sales and market valuation in 2021.
- Market Value Added (MVA) Trends
- MVA demonstrated a general upward trajectory from 2017 to 2019, rising from approximately 22.9 billion US$ to 31.2 billion US$. Following a moderate correction in 2020 to 27.6 billion US$, a substantial peak was reached in 2021 at 40.1 billion US$. However, this valuation did not persist, as the figure declined to 30.0 billion US$ by 2022, returning to levels similar to those seen in 2019.
- Sales Performance
- Sales showed consistent annual growth from 2017 through 2020, increasing from 12.8 billion US$ to 16.0 billion US$. A notable contraction occurred in 2021, where sales fell to 12.5 billion US$, the lowest point in the analyzed period. This was followed by a robust recovery in 2022, with sales reaching a period high of 18.9 billion US$, indicating a strong rebound in operational volume.
- MVA Margin Analysis
- The MVA margin experienced extreme fluctuations, reflecting the disconnect between sales volume and market perception. The margin grew steadily from 178.74% in 2017 to 208.71% in 2019, before dipping to 172.42% in 2020. A dramatic spike to 320.54% occurred in 2021; this peak is particularly significant as it coincided with the lowest sales figure of the period, suggesting that market value was driven by factors other than current revenue. By 2022, the MVA margin fell to its lowest level of 158.87%, occurring simultaneously with the highest recorded sales, which suggests a compression of market premium relative to operational scale.
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