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
Altria Group Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
Between 2019 and 2023, the financial trajectory exhibits a period of value expansion followed by a notable contraction. Market Value Added (MVA) experienced a growth phase, peaking in 2021, before entering a decline that brought the metric nearly back to its 2019 levels by the end of the observed period.
- Market Value Trends
- The fair market value showed an upward trajectory from December 31, 2019, at US$ 109,807 million, reaching a maximum of US$ 124,011 million in 2021. This growth was followed by a consistent decline over the subsequent two years, falling to US$ 106,078 million in 2022 and concluding at US$ 96,549 million in 2023.
- Invested Capital Trajectory
- A sustained reduction in invested capital is observed throughout the five-year period. Capital decreased from US$ 42,624 million in 2019 to US$ 28,647 million in 2023. The most pronounced contraction occurred between 2020 and 2022, suggesting a significant reduction in the capital base required to support operations.
- Market Value Added (MVA) Interpretation
- MVA increased from US$ 67,183 million in 2019 to a peak of US$ 90,487 million in 2021, a result of the simultaneous increase in market value and decrease in invested capital. However, from 2022 to 2023, the contraction in market value surpassed the impact of the lowered capital base, leading to a decline in MVA to US$ 67,902 million by December 31, 2023.
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MVA Spread Ratio
Altria Group Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 67,902) | 77,276) | 90,487) | 74,349) | 67,183) | |
| Invested capital2 | 28,647) | 28,802) | 33,524) | 41,498) | 42,624) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 237.03% | 268.30% | 269.92% | 179.16% | 157.62% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 258.44% | 267.55% | 289.24% | — | — | |
| Mondelēz International Inc. | 97.98% | 73.56% | 85.16% | — | — | |
| PepsiCo Inc. | 265.48% | 296.11% | 297.67% | — | — | |
| Philip Morris International Inc. | 265.23% | 327.97% | 585.34% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 67,902 ÷ 28,647 = 237.03%
4 Click competitor name to see calculations.
Analysis of the market value added and associated efficiency metrics reveals a period of expansion in market valuation relative to capital investment, followed by a corrective phase between 2021 and 2023.
- Market Value Added (MVA)
- MVA exhibited an upward trajectory from 2019 to 2021, rising from 67,183 million to a peak of 90,487 million. However, a subsequent decline occurred over the following two years, with the value returning to 67,902 million by December 31, 2023, effectively erasing the gains made during the growth period.
- Invested Capital
- A consistent downward trend in invested capital is observed throughout the five-year period. The capital base decreased steadily from 42,624 million in 2019 to 28,647 million in 2023. This continuous reduction indicates a significant contraction in the total capital employed within the organization.
- MVA Spread Ratio
- The MVA spread ratio experienced substantial growth between 2019 and 2021, increasing from 157.62% to a peak of 269.92%. This expansion was driven by the combined effect of rising MVA and a shrinking invested capital base. Although the ratio remained nearly flat in 2022 at 268.30%, it declined to 237.03% by December 31, 2023, suggesting a reduction in the market-perceived premium generated for every dollar of invested capital.
The divergence between the steady decline in invested capital and the fluctuating market value added suggests a period of capital restructuring or optimization. The peak in the MVA spread ratio in 2021 marks the point of highest perceived value creation per unit of capital, which has since moderated as market value added trended downward toward 2019 levels.
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MVA Margin
Altria Group Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 67,902) | 77,276) | 90,487) | 74,349) | 67,183) | |
| Net revenues | 24,483) | 25,096) | 26,013) | 26,153) | 25,110) | |
| Performance Ratio | ||||||
| MVA margin2 | 277.34% | 307.92% | 347.85% | 284.28% | 267.55% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Coca-Cola Co. | 471.88% | 497.46% | 600.94% | — | — | |
| Mondelēz International Inc. | 167.29% | 149.09% | 182.53% | — | — | |
| PepsiCo Inc. | 217.79% | 238.05% | 261.55% | — | — | |
| Philip Morris International Inc. | 387.28% | 489.05% | 543.41% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Net revenues
= 100 × 67,902 ÷ 24,483 = 277.34%
3 Click competitor name to see calculations.
The five-year period from 2019 to 2023 is characterized by a bell-shaped trajectory in market valuation, where a period of significant growth peaked in 2021 before retreating to levels nearly identical to the starting period. While net revenues remained relatively stagnant, the volatility in market value added drove substantial fluctuations in the MVA margin.
- Market Value Added (MVA)
- A consistent upward trend was observed between 2019 and 2021, with MVA increasing from 67,183 million to a peak of 90,487 million. This growth was followed by a two-year contraction, with values falling to 77,276 million in 2022 and further declining to 67,902 million by December 31, 2023.
- Net Revenues
- Revenue levels exhibited relative stability with a slight overall downward bias. After a marginal increase to 26,153 million in 2020, net revenues entered a period of gradual decline, ending the period at 24,483 million in 2023, representing a modest decrease compared to 2019 levels.
- MVA Margin
- The MVA margin mirrored the movements of the absolute MVA, rising from 267.55% in 2019 to a high of 347.85% in 2021. The subsequent decline in market valuation led to a contraction of the margin to 307.92% in 2022 and 277.34% in 2023. The close correlation between the MVA and the MVA margin suggests that changes in market perception and valuation were the primary drivers of the margin's volatility, rather than significant shifts in revenue generation.
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