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.
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- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Profitability Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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MVA
Allergan PLC, MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data over the five-year period indicates notable fluctuations in key valuation and capital metrics.
- Market (Fair) Value
- The market value demonstrates a clear declining trend from 2015 through 2018, dropping from approximately $165.3 billion to nearly $68.9 billion. This represents a substantial contraction in market valuation over this period. However, in 2019, the market value experiences a significant recovery, rising to approximately $86.0 billion, suggesting a period of renewed investor confidence or improved market conditions.
- Invested Capital
- Invested capital shows a consistent downward trajectory over the entire period, decreasing year-over-year from about $127.5 billion in 2015 to $80.3 billion in 2019. This steady reduction may imply divestitures, asset disposals, operational downsizing, or other capital efficiency measures taken by the company during these years.
- Market Value Added (MVA)
- MVA starts strongly positive in 2015 at around $37.8 billion, indicating value creation beyond the invested capital. However, the metric turns negative in 2016 and remains negative in the subsequent two years, reaching a low of approximately -$22.2 billion in 2018, evidencing a period of value erosion where the market value fell short of the invested capital. In 2019, MVA recovers to a positive figure of roughly $5.7 billion, reflecting a restoration of value creation potential.
Overall, the data reflects a challenging period from 2015 to 2018 with declining market valuation, shrinking invested capital, and deteriorating market value added. The positive reversal in 2019 suggests possible strategic or operational improvements, leading to enhanced market perceptions and value creation.
MVA Spread Ratio
Allergan PLC, MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial analysis over the periods ending December 31 from 2015 to 2019 reveals notable fluctuations in key financial metrics, including Market Value Added (MVA), Invested Capital, and MVA Spread Ratio.
- Market Value Added (MVA)
- The MVA exhibited a significant positive value in 2015, amounting to approximately 37.78 billion US dollars. However, this figure sharply declined into negative territory in subsequent years, registering -2.27 billion in 2016, further deteriorating to -17.94 billion in 2017, and worsening to -22.15 billion in 2018. By 2019, there was an observable recovery with MVA returning to a positive 5.74 billion. This pattern indicates considerable volatility in value creation, with substantial value destruction from 2016 through 2018 before a partial rebound.
- Invested Capital
- Invested Capital demonstrated a consistent decreasing trend across the analyzed period. Beginning at approximately 127.5 billion US dollars in 2015, the capital invested decreased steadily each year, falling to 111.25 billion in 2016, 103.55 billion in 2017, 91.10 billion in 2018, and finally to 80.27 billion in 2019. This steady decline suggests either divestitures, asset disposals, or reduced capital expenditure initiatives over these years.
- MVA Spread Ratio
- The MVA Spread Ratio followed a pattern consistent with the MVA figures. It was substantially positive at 29.63% in 2015, indicating strong value creation relative to the invested capital. The ratio then turned negative in 2016 at -2.04%, deepened to -17.32% in 2017 and -24.32% in 2018, signaling increasing inefficiency or value erosion relative to capital invested. In 2019, the ratio improved to a positive 7.16%, reflecting initial recovery efforts and improved capital efficiency or profitability.
In summary, the data portrays a period of value contraction and shrinking capital investment from 2015 through 2018, with a tentative recovery signaled in 2019. The fluctuations in MVA and the MVA Spread Ratio highlight challenges in generating shareholder value during the central years, alongside a strategic reduction in invested capital. The partial turnaround in 2019 warrants further examination to assess the sustainability and drivers behind the improved financial performance.
MVA Margin
Allergan PLC, MVA margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added exhibited significant fluctuations over the observed period. Initially, there was a substantial positive MVA of approximately 37.78 billion US dollars in 2015. However, this was followed by a sharp decline into negative territory in 2016, with an MVA of about -2.27 billion US dollars. The downward trend intensified in the subsequent years, reaching a low point in 2018 at approximately -22.15 billion US dollars. In 2019, the MVA rebounded to a positive value of around 5.74 billion US dollars, indicating some recovery in market valuation.
- Adjusted Net Revenues
- Adjusted net revenues showed relatively stable performance throughout the period. The revenues started at roughly 15.06 billion US dollars in 2015 and experienced minor fluctuations, with a slight dip to about 14.57 billion US dollars in 2016. Thereafter, there was moderate growth, peaking near 16.08 billion US dollars by the end of 2019. Overall, revenues maintained a consistent level with modest variability.
- MVA Margin
- The MVA margin mirrored the trend seen in market value added with considerable volatility. It began with a very high positive margin of approximately 250.83% in 2015, which then sharply decreased to a negative margin of -15.6% in 2016. The margin continued to worsen, reaching its lowest point at approximately -140.33% in 2018. By 2019, the margin improved to a positive 35.72%, signaling partial recovery but remaining significantly below the initial level observed in 2015.
- Overall Insights
- While the adjusted net revenues remained relatively steady with slight growth over the five-year period, the market value added and MVA margin exhibited pronounced volatility. The negative MVA and margin values from 2016 through 2018 suggest periods of considerable value erosion or market challenges. The rebound in 2019 indicates a reversal of the declining trend, although the figures had not yet returned to the high positive levels seen in 2015. This pattern may reflect fluctuations in market perception and inherent company valuation dynamics that are not directly correlated with the steadier revenue trends.