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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Colgate-Palmolive Co. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Analysis of Debt
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MVA
Colgate-Palmolive Co., 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), 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 reveals several notable trends related to the market value and invested capital over the five-year period from December 31, 2018 to December 31, 2022.
- Market (fair) value of Colgate
- The market value shows an overall increasing trend from 2018 through 2020, rising from $64.8 billion to $76.2 billion. There is a slight decrease in 2021 to $75.1 billion, followed by a more pronounced decline in 2022 to $69.4 billion. This suggests that the market valuation peaked in 2020 and subsequently experienced downward pressure in the last two years.
- Invested capital
- Invested capital exhibits a generally upward trajectory across the period, increasing from approximately $11.8 billion in 2018 to $14.5 billion in 2022. There is some fluctuation, with a slight dip between 2020 and 2021, but overall, the invested capital base expands steadily, indicating continued capital deployment within the company.
- Market value added (MVA)
- The market value added, which reflects the difference between market value and invested capital, follows a trend similar to the market value. It rises from $53.0 billion in 2018 to a peak of $62.2 billion in 2020, before declining to $61.6 billion in 2021 and further down to $54.9 billion in 2022. Despite the fluctuations, the MVA remains significantly positive, indicating sustained value creation above the invested capital.
In summary, the data indicates a phase of growth in market valuation and value creation up to 2020, followed by a period of some decline through 2022. Invested capital shows a consistent increase, suggesting ongoing investment activity. The decrease in market value and MVA in the last two years could reflect external market conditions or company-specific factors impacting valuation.
MVA Spread Ratio
Colgate-Palmolive Co., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Procter & Gamble Co. | ||||||
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.
The financial measures indicate important trends over the five-year period ending December 31, 2022.
- Market value added (MVA)
- The MVA increased steadily from 2018 through 2020, rising from approximately $53 billion to over $62 billion, which signals enhanced market valuation relative to invested capital during this timeframe. However, it slightly declined in 2021 and more notably decreased in 2022 to about $54.9 billion, suggesting a reduction in perceived value creation by the market in the most recent year.
- Invested capital
- Invested capital showed a consistent upward trend throughout the period, growing from approximately $11.8 billion in 2018 to $14.5 billion by 2022. This steady increase indicates ongoing investment in the company's asset base or operations.
- MVA spread ratio
- The MVA spread ratio, expressing the ratio in percentage terms, remained relatively stable between 2018 and 2021, fluctuating narrowly in the mid-400% range. In 2022, however, the ratio declined significantly to approximately 379.6%. This decline suggests a decrease in the gap between market value and invested capital, potentially reflecting diminished investor confidence or earnings performance relative to invested capital.
Overall, while invested capital has consistently increased over the years, the market's assessment of value added showed initial growth followed by a downturn in the latest year, with the MVA spread ratio reflecting this change in market perception.
MVA Margin
Colgate-Palmolive Co., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Procter & Gamble Co. | ||||||
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 several key trends regarding the company's market value added, net sales, and MVA margin over the five-year period.
- Market Value Added (MVA)
- The market value added showed a general increase from 2018 through 2020, rising from approximately 53,038 million US dollars to 62,223 million US dollars. This represents a steady growth in market capitalization or investor value during this period. However, from 2020 to 2022, the MVA experienced a decline, decreasing to 54,897 million US dollars by the end of 2022. This decline suggests a reduction in perceived incremental value or market capitalization in the most recent years after the peak in 2020.
- Net Sales
- Net sales consistently increased throughout the entire period under review. Starting at 15,544 million US dollars in 2018, net sales gradually rose each year, reaching 17,967 million US dollars in 2022. This steady upward trend denotes robust revenue growth and likely reflects increased market demand, successful business operations, or effective sales strategies over these years.
- MVA Margin
- The MVA margin, which measures market value added relative to sales, exhibited a rising trend initially, moving from 341.21% in 2018 to peak at 386.95% in 2019. Afterward, the margin declined steadily each year, dropping to 305.54% by 2022. This pattern indicates that while revenue increased, the efficiency in creating market value from each sales dollar reduced over the last three years, suggesting potential challenges in maintaining value creation proportional to sales growth during that time frame.