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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Caterpillar Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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MVA
Caterpillar Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data reveals several noteworthy trends over the five-year period ending December 31, 2024. The market (fair) value of the entity exhibits a generally increasing trajectory, rising from approximately $150 billion in 2020 to over $202 billion in 2024. This growth was somewhat subdued in 2021, where a slight decrease was observed compared to 2020, but thereafter the market value increased substantially through 2024, indicating enhanced investor confidence or improved market conditions.
Invested capital shows a relatively stable pattern, fluctuating within a narrow range around $54 billion to $58 billion over the period. The invested capital decreased marginally in 2022 but resumed a gradual upward trend in the following years, reaching just above $57 billion by the end of 2024. This stability suggests consistent capital allocation, without significant expansion or contraction in investment base.
Market value added (MVA), which reflects the difference between market value and invested capital, aligns closely with the market value trend, showing substantial growth overall. MVA decreased in 2021 relative to 2020, mirroring the dip in market value, but then increased robustly in 2022 and accelerated sharply through 2023 and 2024, reaching approximately $145 billion at the end of 2024. This increasing MVA points to enhanced value creation for shareholders, possibly through improved profitability, operational efficiency, or favorable market perceptions exceeding the growth in invested capital.
- Market Value (US$ in millions)
- Decreased slightly from 2020 to 2021, then grew significantly through 2024, rising from 150,072 to 202,634.
- Invested Capital (US$ in millions)
- Remained relatively stable with minor fluctuations, from 54,026 in 2020 to 57,519 in 2024.
- Market Value Added (US$ in millions)
- Mirrored market value trends with a dip in 2021, followed by strong growth, increasing from 96,046 in 2020 to 145,115 in 2024.
In summary, the data indicates a firm maintaining a stable capital base while achieving considerable market value growth, resulting in enhanced market value added. This suggests improved market recognition and positive value generation over the analyzed timeframe.
MVA Spread Ratio
Caterpillar Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2024 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added showed a generally positive trend over the five-year period. There was a decline from 96,046 million US dollars in 2020 to 91,704 million in 2021, indicating a slight reduction in market value. However, after 2021, the market value added increased substantially, reaching 106,493 million in 2022, then rising more sharply to 137,177 million in 2023, and further to 145,115 million in 2024. This suggests an overall strong growth in shareholder value in the latter years following the initial dip.
- Invested Capital
- Invested capital showed relative stability with a modest upward trajectory. Beginning at 54,026 million US dollars in 2020, it increased slightly to 55,552 million in 2021, followed by a minor decrease to 54,801 million in 2022. Thereafter, invested capital resumed a gradual increase to 55,518 million in 2023 and further to 57,519 million in 2024. The fluctuations were moderate, indicating steady capital investment without significant volatility.
- MVA Spread Ratio
- The MVA spread ratio demonstrated an improving trend, reflecting enhanced value creation relative to invested capital. The ratio decreased from 177.78% in 2020 to 165.08% in 2021, which aligns with the initial decline in market value added. From 2021 onward, the ratio increased sharply, reaching 194.33% in 2022, then 247.08% in 2023, and 252.29% in 2024. This upward trend indicates improving efficiency or profitability of invested capital, with greater returns being generated over time.
- Summary
- Overall, the data reveal that after a slight downturn in 2021, both market value added and the MVA spread ratio experienced strong recoveries and continued growth through 2024. Invested capital remained relatively stable with slight increases, suggesting that the company has been able to enhance market value and generate higher returns without proportionally increasing its capital base. The increasing MVA spread ratio supports the interpretation of improved capital utilization and value creation over the analyzed period.
MVA Margin
Caterpillar Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Sales of Machinery, Energy & Transportation | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 MVA. See details »
2 2024 Calculation
MVA margin = 100 × MVA ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data over the periods ending December 31, 2020 through December 31, 2024 reveals a number of significant trends and shifts.
- Market Value Added (MVA)
- The MVA, measured in millions of US dollars, shows an overall upward trajectory with fluctuations. Starting at 96,046 million in 2020, it slightly decreased to 91,704 million in 2021, suggesting a period of lower value creation. From 2021 onwards, MVA exhibited consistent growth, reaching 106,493 million in 2022 and increasing further to 137,177 million in 2023. The growth continued into 2024, albeit at a slower pace, reaching 145,115 million. This trend indicates a strong recovery and improvement in value generation over the latter years.
- Sales of Machinery, Energy & Transportation
- Sales figures expressed in millions of US dollars demonstrate a notable increase from 39,022 million in 2020 to a peak of 63,869 million in 2023. There was a considerable jump from 2020 to 2021, and continued growth up to 2023. However, in 2024, sales decreased slightly to 61,363 million, indicating a possible market adjustment or reduction in demand after the peak year. Despite this decline, sales remain substantially higher than the levels reported in 2020 and 2021.
- MVA Margin
- The MVA margin percentage shows variability over the five-year span. It started at a high level of 246.13% in 2020 and dropped markedly to 190.31% in 2021. The margin remained relatively stable through 2022 at 188.24%, then increased to 214.78% in 2023, evidencing improved efficiency or profitability in relation to market value added. The margin further rose in 2024 to 236.49%, approaching the elevated margin from 2020. This pattern suggests a recovery in the company's market value efficiency following the dip in 2021.