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
Best Buy Co. Inc., MVA calculation
US$ in millions
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 »
An analysis of the financial data from 2017 to 2022 reveals significant volatility in the creation of shareholder wealth, as measured by Market Value Added (MVA). The company maintained a positive MVA throughout the period, indicating that the market valuation consistently exceeded the total invested capital. The most pronounced growth occurred between 2020 and 2021, followed by a contraction in 2022.
- Market Value Trajectory
- The fair market value exhibited a fluctuating upward trend for the majority of the period. After an initial increase from 15,942 million USD in 2017 to a peak of 22,827 million USD in 2019, a decline was noted in 2020 to 17,019 million USD. This was followed by a sharp appreciation to 33,619 million USD in 2021, the highest point in the series, before receding to 26,837 million USD in 2022.
- Invested Capital Trends
- Invested capital showed less volatility than market value but followed a general expansionary path until 2021. Following a dip to 5,407 million USD in 2018, capital investment grew steadily, peaking at 9,079 million USD in 2021. A reduction to 7,721 million USD was observed in 2022, suggesting a contraction in the capital base or an optimization of invested assets.
- Market Value Added (MVA) Performance
- The MVA fluctuated in alignment with the market value, reflecting the market's shifting perception of the company's value creation. MVA rose from 9,329 million USD in 2017 to 15,890 million USD in 2018, remaining relatively stable in 2019 before dropping back to 9,370 million USD in 2020. A significant surge is observed in 2021, where MVA reached 24,540 million USD, indicating a period of peak value creation. The period concludes with a decline to 19,116 million USD in 2022, though this remains substantially higher than the 2017 and 2020 levels.
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MVA Spread Ratio
Best Buy Co. 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 millions) | |||||||
| Market value added (MVA)1 | 19,116) | 24,540) | 9,370) | 15,617) | 15,890) | 9,329) | |
| Invested capital2 | 7,721) | 9,079) | 7,649) | 7,210) | 5,407) | 6,613) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 247.59% | 270.29% | 122.50% | 216.60% | 293.87% | 141.05% | |
| 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 × 19,116 ÷ 7,721 = 247.59%
4 Click competitor name to see calculations.
The analysis of market value added (MVA) and invested capital reveals a period of significant volatility in value creation between 2017 and 2022. The relationship between market valuation and the capital deployed suggests fluctuating investor confidence and varying levels of efficiency in generating market value relative to the corporate investment base.
- Market Value Added (MVA) Trends
- MVA exhibited substantial fluctuations, starting at 9,329 million USD in 2017 and reaching a peak of 24,540 million USD in 2021. A notable decline occurred in 2020, where MVA fell to 9,370 million USD, before a sharp recovery in 2021 and a subsequent moderation to 19,116 million USD by 2022.
- Invested Capital Dynamics
- Invested capital showed a general upward trajectory from a low of 5,407 million USD in 2018 to a high of 9,079 million USD in 2021. This trend indicates an increase in the resource base allocated to operations over this period, followed by a contraction to 7,721 million USD in 2022.
- MVA Spread Ratio Performance
- The MVA spread ratio demonstrates high variance, peaking at 293.87% in 2018 and 270.29% in 2021. The lowest ratio was recorded in 2020 at 122.50%, indicating a compression in the market's valuation of the company relative to its invested capital. The recovery in 2021 and the subsequent level of 247.59% in 2022 suggest that the market continues to value the firm significantly above its capital investment.
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MVA Margin
Best Buy Co. 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 millions) | |||||||
| Market value added (MVA)1 | 19,116) | 24,540) | 9,370) | 15,617) | 15,890) | 9,329) | |
| Revenue | 51,761) | 47,262) | 43,638) | 42,879) | 42,151) | 39,403) | |
| Add: Increase (decrease) in deferred revenue | 392) | 210) | 55) | (7) | 35) | 61) | |
| Adjusted revenue | 52,153) | 47,472) | 43,693) | 42,872) | 42,186) | 39,464) | |
| Performance Ratio | |||||||
| MVA margin2 | 36.65% | 51.69% | 21.44% | 36.43% | 37.67% | 23.64% | |
| 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 ÷ Adjusted revenue
= 100 × 19,116 ÷ 52,153 = 36.65%
3 Click competitor name to see calculations.
The financial performance between 2017 and 2022 is characterized by a consistent increase in adjusted revenue contrasted with significant volatility in market value added (MVA) and the corresponding MVA margin. While operational scale expanded steadily, the market's valuation of the company experienced sharp fluctuations, particularly between 2020 and 2022.
- Market Value Added (MVA)
- MVA exhibited a non-linear trajectory, beginning at 9,329 million USD in 2017 and reaching a peak of 24,540 million USD in 2021. A notable contraction was observed in 2020, where the value declined to 9,370 million USD, effectively returning to 2017 levels. This was followed by a rapid surge in 2021 and a subsequent correction to 19,116 million USD by 2022.
- Adjusted Revenue
- Adjusted revenue demonstrated a stable and uninterrupted upward trend throughout the six-year period. Starting at 39,464 million USD in 2017, revenue grew annually to reach 52,153 million USD in 2022. This indicates a consistent expansion of the business's top-line performance, regardless of the volatility seen in market valuation.
- MVA Margin
- The MVA margin reflected the volatility of market value relative to the growing revenue base. The margin rose from 23.64% in 2017 to 37.67% in 2018, followed by a decline to a period low of 21.44% in 2020. A substantial spike occurred in 2021, with the margin reaching a maximum of 51.69%, before moderating to 36.65% in 2022. The divergence between the steady revenue growth and the fluctuating MVA margin suggests that market sentiment and external valuation drivers had a more significant impact on MVA than organic revenue growth during this period.
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