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
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Analysis of Revenues
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MVA
Builders FirstSource 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 »
The financial data for the period ending December 31 from 2018 through 2022 reveal significant changes in the market valuation and invested capital figures, as well as corresponding shifts in market value added (MVA).
- Market (fair) value
- The market value exhibited a consistent upward trend from 2018 through 2021, rising from approximately 3.39 billion USD to a peak of around 16.46 billion USD. However, in 2022, there was a noticeable decline to about 14.88 billion USD, indicating a reduction after several years of growth.
- Invested capital
- The invested capital remained relatively stable between 2018 and 2019, increasing marginally from roughly 2.39 billion USD to 2.42 billion USD. A moderate increase occurred in 2020 to around 3.09 billion USD. Notably, there was a substantial increase in 2021, with invested capital reaching approximately 8.51 billion USD, and it stayed relatively constant into 2022 at about 8.57 billion USD. This sharp rise suggests significant capital deployment occurred between 2020 and 2021.
- Market value added (MVA)
- The MVA followed a trajectory that parallels the market value changes but with more volatility. It increased from 1.00 billion USD in 2018 to a peak of approximately 7.95 billion USD in 2021. Despite the large invested capital increase in 2021, MVA plateaued between 2020 and 2021 before declining to about 6.31 billion USD in 2022, demonstrating that while invested capital remained high, the market's additional value creation diminished in the latest year.
Overall, the data indicates a period of robust growth in both market valuation and invested capital culminating in 2021, followed by a contraction in market value and MVA in 2022 despite sustained high invested capital. This pattern suggests challenges in maintaining market value growth relative to invested resources during the most recent year.
MVA Spread Ratio
Builders FirstSource 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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The Market Value Added exhibits a significant upward trend from 2018 through 2021, indicating growing value creation over this period. It increased markedly from approximately 1,000,760 thousand USD in 2018 to a peak of around 7,954,471 thousand USD in 2021. However, in 2022, there was a noticeable decline to 6,314,192 thousand USD, suggesting a reduction in value creation compared to the previous year.
- Invested Capital
- Invested capital demonstrates a general increase over the five-year span. Starting at about 2,393,541 thousand USD in 2018, it rose steadily, with a substantial jump between 2020 and 2021 to 8,507,614 thousand USD. The capital investment remained relatively stable between 2021 and 2022, with a slight increase to 8,565,898 thousand USD, indicating ongoing investment in company assets.
- MVA Spread Ratio
- The MVA spread ratio experienced high volatility during the period. It showed a sharp increase from 41.81% in 2018 to a peak of 254.66% in 2020, reflecting a period of strong performance relative to invested capital. This was followed by a sharp decline to 93.5% in 2021 and a further decrease to 73.71% in 2022, signaling a diminishing return relative to invested capital despite the increased capital base.
- Summary of Trends
- Overall, the data reveal robust growth in both market value added and invested capital up to 2021, indicative of aggressive investment and value creation. However, while invested capital continued to grow slightly into 2022, the decline in both MVA and the MVA spread ratio suggests reduced efficiency in capital utilization or challenges impacting market valuation in the most recent year. This pattern may warrant further investigation into the factors affecting profitability and capital deployment effectiveness.
MVA Margin
Builders FirstSource 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 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals notable trends over the five-year period ending in 2022. Market value added (MVA) exhibits a strong upward trajectory from 2018 through 2021, increasing from approximately 1 million US$ thousands to nearly 8 million US$ thousands. However, in 2022, MVA declines significantly to about 6.3 million US$ thousands, representing a downturn after several years of growth.
Net sales show a mixed pattern with an initial decrease from 2018 to 2019, dropping from roughly 7.7 million US$ thousands to 7.3 million US$ thousands. From 2019 onward, net sales increase substantially, reaching almost 22.7 million US$ thousands in 2022, nearly tripling the 2019 figure. This strong sales growth is especially pronounced between 2020 and 2021, reflecting a robust expansion period.
The MVA margin percentage fluctuates significantly across the years. After starting at around 13% in 2018, it spikes sharply to 92% in 2020, then decreases to roughly 40% in 2021, and drops further to about 28% in 2022. This volatility indicates varying efficiency or profitability related to market value added relative to sales, with the peak in 2020 suggesting an exceptional period of value creation relative to sales volume.
- Market Value Added (MVA)
- Strong growth from 2018 to 2021, followed by a notable decline in 2022.
- Net Sales
- Initial decline from 2018 to 2019, then significant and sustained growth through 2022, more than tripling in four years.
- MVA Margin
- High volatility with a peak in 2020 at 92%, then decline over the next two years, indicating fluctuations in value creation efficiency relative to sales.
Overall, the data reflect a company undergoing significant growth in sales alongside fluctuating market value creation efficiency, with a recent contraction in market value added despite continued sales expansion in the latest year. This suggests potential challenges in sustaining profitability or market valuation gains relative to sales growth during the last reported period.