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
Carrier Global Corp., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
An analysis of the Market Value Added (MVA) from 2020 through 2022 indicates a period of volatility in market perception despite a relatively stable capital investment base. The fluctuations in MVA are closely correlated with the changes in the fair market value of the entity, suggesting that investor sentiment played a primary role in the valuation variance during this timeframe.
- Market Value Trends
- The market value exhibited a non-linear trajectory, increasing from 44,626 million USD in 2020 to a peak of 50,498 million USD in 2021, before declining to 45,394 million USD by the end of 2022. This movement indicates a period of growth in market valuation followed by a subsequent correction.
- Invested Capital Stability
- Invested capital remained comparatively steady over the three-year period. After a marginal decrease from 19,032 million USD in 2020 to 18,835 million USD in 2021, the figure rose to 19,880 million USD in 2022. The stability of this metric suggests that fluctuations in MVA were not driven by significant changes in the internal capital structure or asset investments.
- Market Value Added (MVA) Performance
- MVA mirrored the trajectory of the fair market value, rising from 25,594 million USD in 2020 to 31,663 million USD in 2021, before retreating to 25,514 million USD in 2022. The peak in 2021 reflects a substantial increase in the value created for shareholders over and above the capital invested. By the end of 2022, however, the MVA returned to levels nearly identical to those observed in 2020, effectively neutralizing the gains achieved in 2021.
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MVA Spread Ratio
Carrier Global Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Market value added (MVA)1 | 25,514) | 31,663) | 25,594) | |
| Invested capital2 | 19,880) | 18,835) | 19,032) | |
| Performance Ratio | ||||
| MVA spread ratio3 | 128.34% | 168.11% | 134.48% | |
| Benchmarks | ||||
| MVA Spread Ratio, Competitors4 | ||||
| Boeing Co. | 250.73% | 256.11% | — | |
| Caterpillar Inc. | 194.33% | 165.08% | — | |
| Eaton Corp. plc | 149.39% | 132.30% | — | |
| GE Aerospace | 84.87% | 110.77% | — | |
| Honeywell International Inc. | 224.23% | 209.78% | — | |
| Lockheed Martin Corp. | 399.68% | 319.28% | — | |
| RTX Corp. | 59.03% | 61.85% | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 25,514 ÷ 19,880 = 128.34%
4 Click competitor name to see calculations.
An analysis of the value creation metrics between 2020 and 2022 reveals a volatile trajectory in market value addition, characterized by a significant peak in 2021 followed by a contraction in 2022.
- Market Value Added (MVA)
- A notable increase occurred between 2020 and 2021, with MVA rising from US$ 25,594 million to US$ 31,663 million. This upward trend reversed in 2022, as the value declined to US$ 25,514 million, effectively returning the metric to its 2020 level.
- Invested Capital
- The invested capital remained relatively stable throughout the period. A marginal decrease was recorded in 2021, falling to US$ 18,835 million from US$ 19,032 million in 2020, before rising to US$ 19,880 million by the end of 2022.
- MVA Spread Ratio
- The MVA spread ratio followed the trajectory of the market value added, showing significant fluctuation. The ratio expanded from 134.48% in 2020 to a peak of 168.11% in 2021, before contracting to 128.34% in 2022, which represents the lowest efficiency level of the three-year period.
The observed patterns indicate that the volatility in the MVA spread ratio was driven almost exclusively by shifts in market valuation rather than changes in the capital base. The substantial peak in 2021 suggests a period of heightened market optimism or superior value creation relative to capital employed, while the 2022 decline reflects a reduction in the market premium attributed to the company's invested capital.
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MVA Margin
Carrier Global Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Market value added (MVA)1 | 25,514) | 31,663) | 25,594) | |
| Net sales | 20,421) | 20,613) | 17,456) | |
| Performance Ratio | ||||
| MVA margin2 | 124.94% | 153.61% | 146.62% | |
| Benchmarks | ||||
| MVA Margin, Competitors3 | ||||
| Boeing Co. | 191.47% | 203.39% | — | |
| Caterpillar Inc. | 188.24% | 190.31% | — | |
| Eaton Corp. plc | 221.57% | 198.58% | — | |
| GE Aerospace | 76.94% | 111.81% | — | |
| Honeywell International Inc. | 295.90% | 293.22% | — | |
| Lockheed Martin Corp. | 161.14% | 136.30% | — | |
| RTX Corp. | 96.78% | 107.41% | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 25,514 ÷ 20,421 = 124.94%
3 Click competitor name to see calculations.
The analysis of market value creation reveals a period of growth followed by a correction between 2020 and 2022. Market Value Added (MVA) and the corresponding MVA margin peaked in 2021 before experiencing a decline in 2022, suggesting a contraction in the market premium relative to the company's sales volume.
- Market Value Added (MVA)
- MVA experienced a notable increase from US$ 25,594 million in 2020 to a peak of US$ 31,663 million in 2021. This upward trend was reversed by December 31, 2022, as the value declined to US$ 25,514 million, effectively returning to the levels observed at the start of the three-year period.
- Net Sales Trends
- Net sales demonstrated strong growth from US$ 17,456 million in 2020 to US$ 20,613 million in 2021. Performance remained relatively stable in 2022, with a slight decrease to US$ 20,421 million. The stability of sales in 2022 suggests that the decline in MVA was driven by market valuation factors rather than a significant loss in operational revenue.
- MVA Margin Volatility
- The MVA margin rose from 146.62% in 2020 to 153.61% in 2021, reflecting enhanced market value creation per dollar of sales. However, a significant contraction occurred in 2022, with the margin dropping to 124.94%. This decline indicates a reduction in the market's valuation of the company relative to its sales capacity.
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