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
Albemarle Corp., 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 »
Analysis of the financial metrics between 2018 and 2022 reveals a substantial expansion in Market Value Added (MVA), indicating a significant increase in the wealth created for shareholders relative to the capital invested in the business.
- Market Value Trajectory
- The market value exhibited a consistent and accelerating upward trend, increasing from 11.76 billion USD in 2018 to 35.01 billion USD by the end of 2022. A particularly sharp acceleration is observed between 2019 and 2020, where the valuation nearly doubled, suggesting a substantial increase in market confidence and perceived future earning potential.
- Invested Capital Trends
- Invested capital grew from 5.43 billion USD in 2018 to 10.05 billion USD in 2022. The growth was non-linear, characterized by a steady increase through 2020, a contraction to 6.79 billion USD in 2021, and a subsequent surge in 2022. This pattern suggests a strategic realignment of capital or a period of divestment followed by aggressive reinvestment.
- Market Value Added (MVA) Performance
- MVA demonstrated aggressive growth over the five-year period. After a slight dip in 2019 to 5.64 billion USD, the MVA rose sharply to 24.95 billion USD by 2022. The fact that MVA grew at a significantly faster rate than invested capital indicates that the market is attributing a high premium to the company's strategic assets and growth prospects, reflecting highly efficient value creation.
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MVA Spread Ratio
Albemarle Corp., 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 | 24,954,394) | 18,310,156) | 14,916,292) | 5,635,107) | 6,329,517) | |
| Invested capital2 | 10,052,399) | 6,792,146) | 7,383,741) | 6,900,307) | 5,433,093) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 248.24% | 269.58% | 202.02% | 81.66% | 116.50% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Linde plc | 162.37% | 128.35% | — | — | — | |
| Sherwin-Williams Co. | 296.84% | 418.72% | — | — | — | |
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 × 24,954,394 ÷ 10,052,399 = 248.24%
4 Click competitor name to see calculations.
The financial trajectory from 2018 to 2022 is characterized by a substantial increase in market value creation, particularly following a period of consolidation in 2019. An aggressive upward trend in market valuation relative to invested capital is evident, indicating a significant expansion in the company's perceived value by the market.
- Market Value Added (MVA)
- A strong growth pattern is observed in MVA, which rose from 6,329,517 thousand US$ in 2018 to 24,954,394 thousand US$ by the end of 2022. Although a slight contraction occurred in 2019, the subsequent three years saw an accelerated increase, with the most significant leap occurring between 2019 and 2020, where the value more than doubled.
- Invested Capital
- Invested capital exhibited a general upward trend, increasing from 5,433,093 thousand US$ in 2018 to 10,052,399 thousand US$ in 2022. A period of relative stability was noted between 2019 and 2021, including a minor decrease in 2021, followed by a sharp increase in 2022, suggesting a significant capital deployment toward the end of the observed period.
- MVA Spread Ratio
- The MVA spread ratio reflects high volatility followed by a sustained increase in value creation efficiency. After dipping to 81.66% in 2019, the ratio surged to 202.02% in 2020 and peaked at 269.58% in 2021. While the ratio moderated slightly to 248.24% in 2022, it remained substantially higher than pre-2020 levels, demonstrating that market value grew at a much faster rate than the capital invested in the business.
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MVA Margin
Albemarle Corp., 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 | 24,954,394) | 18,310,156) | 14,916,292) | 5,635,107) | 6,329,517) | |
| Net sales | 7,320,104) | 3,327,957) | 3,128,909) | 3,589,427) | 3,374,950) | |
| Performance Ratio | ||||||
| MVA margin2 | 340.90% | 550.19% | 476.73% | 156.99% | 187.54% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Linde plc | 352.06% | 302.43% | — | — | — | |
| Sherwin-Williams Co. | 232.48% | 331.88% | — | — | — | |
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 ÷ Net sales
= 100 × 24,954,394 ÷ 7,320,104 = 340.90%
3 Click competitor name to see calculations.
The financial trajectory from 2018 to 2022 is characterized by a substantial expansion in market value added (MVA), which grew from 6,329,517 thousand USD to 24,954,394 thousand USD. This growth indicates a significant increase in the market's valuation of the company relative to the capital invested, particularly starting in 2020 when the MVA more than doubled from the previous year.
- Market Value Added (MVA) Trends
- A consistent upward trend in absolute MVA is observed from 2019 onward. After a minor contraction in 2019, the value accelerated rapidly, increasing by approximately 165% between 2019 and 2020, and continuing to climb through 2022. This suggests a strong positive shift in investor sentiment and market perceived value over the five-year period.
- Net Sales Performance
- Net sales remained relatively stable between 2018 and 2021, fluctuating within a narrow range of 3.1 billion to 3.6 billion USD. However, a significant surge occurred in 2022, where sales reached 7,320,104 thousand USD, representing more than a twofold increase compared to the 2021 figures.
- MVA Margin Analysis
- The MVA margin exhibited significant volatility. The ratio declined from 187.54% in 2018 to 156.99% in 2019, before experiencing a sharp escalation to 476.73% in 2020 and peaking at 550.19% in 2021. In 2022, despite the continued growth of absolute MVA, the margin contracted to 340.90%. This compression is attributed to the rapid expansion of net sales, which grew at a rate that exceeded the growth of the MVA during that specific period.
In summary, while the company achieved its highest absolute market value added and net sales in 2022, the efficiency of value creation relative to sales, as measured by the MVA margin, reached its zenith in 2021. The divergence in 2022 suggests that the scale of operations expanded more rapidly than the incremental increase in market value.
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