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
SolarEdge 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 »
Between 2018 and 2022, a substantial expansion in market valuation relative to invested capital was observed. The consistently positive and growing gap between these two metrics indicates that the market perceives significant value creation exceeding the actual capital contributions, reflecting high investor confidence in future growth and profitability.
- Market Value Trends
- Market valuation experienced rapid escalation from 1.83 billion in 2018 to a peak of 17.26 billion in 2020. A correction occurred in 2021, where the value decreased to 13.25 billion, followed by a recovery to 16.66 billion by the end of 2022.
- Invested Capital Trajectory
- A steady upward trend in invested capital is evident, rising from 559.31 million in 2018 to 2.61 billion in 2022. This growth suggests a continuous commitment to expanding the operational base and increasing the internal resource pool to support business scaling.
- Market Value Added (MVA) Dynamics
- The MVA grew exponentially from 1.27 billion in 2018 to a peak of 15.53 billion in 2020. Despite a decline to 11.55 billion in 2021, the MVA rebounded to 14.05 billion in 2022. The magnitude of the MVA relative to the invested capital highlights that the majority of the company's market value is derived from intangible assets, growth expectations, and strategic positioning rather than just the tangible capital deployed.
- Correlation Analysis
- The fluctuations in MVA are closely correlated with changes in market value rather than changes in invested capital. While invested capital grew linearly, MVA exhibited higher volatility, indicating that external market sentiment and valuation multiples were the primary drivers of the overall value added during this period.
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MVA Spread Ratio
SolarEdge 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 | 14,049,672) | 11,551,842) | 15,528,140) | 5,122,794) | 1,272,890) | |
| Invested capital2 | 2,608,920) | 1,700,638) | 1,734,649) | 909,829) | 559,312) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 538.52% | 679.27% | 895.17% | 563.05% | 227.58% | |
| 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: 2022-12-31), 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 × 14,049,672 ÷ 2,608,920 = 538.52%
4 Click competitor name to see calculations.
The analysis of valuation metrics from 2018 to 2022 reveals a period of aggressive market value expansion followed by a decline in the efficiency of value creation relative to the capital employed.
- Market Value Added (MVA)
- A significant upward trajectory is observed from 2018 to 2020, with MVA increasing from 1.27 billion USD to a peak of 15.53 billion USD. Following this peak, a contraction occurred in 2021, bringing the value down to 11.55 billion USD, before a recovery to 14.05 billion USD was recorded by the end of 2022.
- Invested Capital
- Invested capital showed consistent growth over the five-year period, rising from 559.31 million USD in 2018 to 2.61 billion USD in 2022. The most substantial increase occurred between 2019 and 2020, where capital nearly doubled, followed by a period of relative stability in 2021 and a further sharp increase in 2022.
- MVA Spread Ratio
- The MVA spread ratio exhibited a sharp ascent, peaking at 895.17% in 2020, which indicates that the market valuation far exceeded the invested capital during this period. However, a subsequent downward trend is evident, with the ratio falling to 679.27% in 2021 and further to 538.52% in 2022. The decline in this ratio during 2022, despite the increase in absolute MVA, confirms that the growth in invested capital outpaced the growth in market value added during the final year of the analyzed period.
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MVA Margin
SolarEdge 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 | 14,049,672) | 11,551,842) | 15,528,140) | 5,122,794) | 1,272,890) | |
| Revenues | 3,110,279) | 1,963,865) | 1,459,271) | 1,425,660) | 937,237) | |
| Add: Increase (decrease) in deferred revenues | 44,232) | 29,325) | (20,777) | 85,776) | 41,009) | |
| Adjusted revenues | 3,154,511) | 1,993,190) | 1,438,494) | 1,511,436) | 978,246) | |
| Performance Ratio | ||||||
| MVA margin2 | 445.38% | 579.57% | 1,079.47% | 338.94% | 130.12% | |
| 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: 2022-12-31), 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 revenues
= 100 × 14,049,672 ÷ 3,154,511 = 445.38%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a period of aggressive market valuation growth, followed by a correction and a subsequent phase of revenue acceleration. While the absolute market value added remained significantly higher at the end of the period than at the beginning, the relationship between market value and revenue underwent a notable shift.
- Market Value Added (MVA) Trends
- A substantial upward trajectory in MVA is observed between 2018 and 2020, with the value rising from 1,272,890 thousand US$ to a peak of 15,528,140 thousand US$. Following this peak, a contraction occurred in 2021, bringing the value down to 11,551,842 thousand US$, before recovering to 14,049,672 thousand US$ by the end of 2022.
- Adjusted Revenue Trajectory
- Revenues demonstrated a consistent long-term growth pattern, increasing from 978,246 thousand US$ in 2018 to 3,154,511 thousand US$ in 2022. Aside from a marginal decrease observed in 2020, the growth accelerated significantly in the final year of the analyzed period, more than doubling between 2020 and 2022.
- MVA Margin Analysis
- The MVA margin exhibited extreme volatility, reflecting a divergence between market sentiment and revenue generation. The margin expanded rapidly from 130.12% in 2018 to an exceptional peak of 1,079.47% in 2020. This peak suggests a period where market valuation grew at a rate far exceeding the growth of adjusted revenues. From 2021 onward, a downward trend in the margin is observed, falling to 579.57% and eventually 445.38% in 2022. This compression occurred despite the continued increase in absolute revenues, indicating a normalization of market expectations relative to the company's top-line performance.
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