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
Constellation Brands Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) from February 2017 to February 2022 reveals a period of fluctuation followed by a strong trend of value creation. Throughout the observed timeframe, the company consistently maintained a positive MVA, indicating that the market valuation of the firm remained substantially higher than the total capital invested.
- Market Valuation Trends
- The fair market value experienced a general upward trajectory, increasing from approximately 43.16 billion USD in 2017 to 59.37 billion USD in 2022. A notable contraction occurred in February 2020, when the value declined to 43.59 billion USD, representing a return to 2017 levels. This was followed by a robust recovery in 2021 and 2022, where the valuation reached its peak.
- Invested Capital Dynamics
- Invested capital showed a period of expansion followed by a steady contraction. Capital rose from 17.41 billion USD in 2017 to a peak of 24.89 billion USD in 2019. After 2019, a consistent downward trend was observed, with invested capital decreasing to 20.49 billion USD by February 2022. This suggests a transition from a phase of aggressive capital investment toward a strategy of capital optimization.
- Market Value Added (MVA) Performance
- The MVA exhibited significant volatility, starting at 25.75 billion USD in 2017 and reaching a trough of 21.80 billion USD in 2020. The decline between 2018 and 2020 was driven by a combination of decreasing market value and relatively high levels of invested capital. However, a sharp reversal occurred after February 2020; the simultaneous increase in market value and the reduction in invested capital led to a substantial rise in MVA, which reached 38.88 billion USD by February 2022. This suggests that the market increasingly valued the company's efficiency and its ability to generate wealth with a reduced capital base.
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MVA Spread Ratio
Constellation Brands Inc., MVA spread ratio calculation, comparison to benchmarks
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 38,876,762) | 37,449,945) | 21,795,708) | 29,107,759) | 35,750,719) | 25,749,998) | |
| Invested capital2 | 20,491,900) | 21,239,800) | 21,790,300) | 24,890,124) | 18,550,367) | 17,413,511) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 189.72% | 176.32% | 100.02% | 116.95% | 192.72% | 147.87% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Coca-Cola Co. | 267.55% | 289.24% | — | — | — | — | |
| Mondelēz International Inc. | 73.56% | 85.16% | — | — | — | — | |
| PepsiCo Inc. | 296.11% | 297.67% | — | — | — | — | |
| Philip Morris International Inc. | 327.97% | 585.34% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 38,876,762 ÷ 20,491,900 = 189.72%
4 Click competitor name to see calculations.
The financial data indicates significant volatility in value creation and capital utilization between February 2017 and February 2022, characterized by a notable dip in the middle of the period followed by a strong recovery.
- Market Value Added (MVA)
- The MVA experienced substantial fluctuations, starting at 25.75 billion in February 2017 and peaking at 38.88 billion by February 2022. A period of contraction is observed between February 2018 and February 2020, where the value declined from 35.75 billion to a period low of 21.80 billion. This was followed by a sharp recovery in February 2021, with MVA increasing to 37.45 billion, indicating a strong restoration of market confidence and perceived future profitability.
- Invested Capital
- Invested capital showed a different trajectory, peaking in February 2019 at 24.89 billion. Following this peak, a consistent downward trend is observed over the subsequent three years, with capital reducing to 20.49 billion by February 2022. This suggests a strategic reduction in the capital base or an increase in efficiency in capital deployment during the latter half of the analyzed period.
- MVA Spread Ratio
- The MVA spread ratio reflects the volatility seen in market value, exhibiting a peak of 192.72% in February 2018 before declining to a low of 100.02% in February 2020. The subsequent recovery is pronounced, with the ratio climbing to 189.72% by February 2022. The correlation between the decreasing invested capital and the increasing spread ratio from 2020 to 2022 indicates that the increase in market value was achieved while simultaneously reducing the capital employed, thereby enhancing the efficiency of value creation.
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MVA Margin
Constellation Brands Inc., MVA margin calculation, comparison to benchmarks
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 38,876,762) | 37,449,945) | 21,795,708) | 29,107,759) | 35,750,719) | 25,749,998) | |
| Net sales | 8,820,700) | 8,614,900) | 8,343,500) | 8,116,000) | 7,585,000) | 7,331,500) | |
| Add: Increase (decrease) in deferred revenue | 118,300) | —) | —) | —) | —) | —) | |
| Adjusted net sales | 8,939,000) | 8,614,900) | 8,343,500) | 8,116,000) | 7,585,000) | 7,331,500) | |
| Performance Ratio | |||||||
| MVA margin2 | 434.91% | 434.71% | 261.23% | 358.65% | 471.33% | 351.22% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Coca-Cola Co. | 497.46% | 600.94% | — | — | — | — | |
| Mondelēz International Inc. | 149.09% | 182.53% | — | — | — | — | |
| PepsiCo Inc. | 238.05% | 261.55% | — | — | — | — | |
| Philip Morris International Inc. | 489.05% | 543.41% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × 38,876,762 ÷ 8,939,000 = 434.91%
3 Click competitor name to see calculations.
The financial performance from February 2017 to February 2022 is characterized by a divergence between consistent revenue growth and volatile market valuation. While operational scale expanded steadily, the market's valuation of the company's value creation fluctuated significantly over the six-year period.
- Market Value Added (MVA)
- MVA exhibited significant volatility, starting at US$ 25.75 billion in 2017 and reaching a peak of US$ 38.88 billion by 2022. A notable increase occurred in 2018, followed by a two-year decline that reached a trough of US$ 21.80 billion in February 2020. This downturn was followed by a sharp recovery in 2021, where value added surged to US$ 37.45 billion, nearly returning to its previous peak.
- Adjusted Net Sales
- In contrast to the volatility of market valuation, adjusted net sales demonstrated a linear and uninterrupted upward trend. Revenue grew from US$ 7.33 billion in 2017 to US$ 8.94 billion in 2022. This consistent growth indicates a steady expansion of the company's operational footprint and market reach regardless of the fluctuations in market-perceived value.
- MVA Margin
- The MVA margin, which relates market value added to adjusted net sales, mirrored the volatility of the MVA. The margin peaked at 471.33% in 2018 before declining to a period low of 261.23% in 2020. A strong rebound is observed in 2021, with the margin rising to 434.71%, and remaining essentially flat at 434.91% in 2022. The significant fluctuations in this margin suggest that changes in market sentiment and investor expectations had a more profound impact on value creation than the steady growth in sales.
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