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
EQT Corp., MVA calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
An analysis of the market value added (MVA) from 2017 to 2021 reveals a period of substantial valuation volatility and a consistent gap between market valuation and invested capital. While the MVA remained negative throughout the entire observation period, a significant recovery trend emerged after 2019.
- Market Valuation Trends
- A precipitous decline in market value is observed between 2017 and 2019, falling from US$ 24.27 billion to US$ 6.42 billion. This contraction represents a loss of approximately 73% of market capitalization within two years. However, a recovery phase began in 2020, with the value increasing to US$ 10.99 billion and further rising to US$ 14.79 billion by the end of 2021.
- Invested Capital Dynamics
- Invested capital exhibited a general downward trajectory from 2017 to 2020, decreasing from US$ 26.51 billion to US$ 15.62 billion. This reduction indicates a significant contraction in the capital base during this window. A slight reversal occurred in 2021, with invested capital increasing to US$ 16.53 billion.
- Market Value Added (MVA) Performance
- The MVA remained negative for all five years, indicating that the market valuation was consistently lower than the total capital invested in the business. The deficit widened sharply from 2017 to 2019, reaching a peak negative value of US$ 10.23 billion. From 2020 onward, the MVA showed marked improvement, narrowing the deficit to US$ 4.63 billion in 2020 and US$ 1.74 billion in 2021, suggesting a gradual restoration of market confidence relative to the capital base.
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MVA Spread Ratio
EQT Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | (1,737,043) | (4,630,568) | (10,234,669) | (9,102,950) | (2,237,326) | |
| Invested capital2 | 16,527,021) | 15,621,670) | 16,653,426) | 18,393,800) | 26,508,072) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | -10.51% | -29.64% | -61.46% | -49.49% | -8.44% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 54.49% | — | — | — | — | |
| ConocoPhillips | 86.17% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 42.25% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × -1,737,043 ÷ 16,527,021 = -10.51%
4 Click competitor name to see calculations.
The financial performance between 2017 and 2021 is characterized by a period of substantial value erosion followed by a phased recovery. Market Value Added (MVA) remained negative throughout the entire period, indicating that the market value of the company was consistently lower than the capital invested into the business.
- Market Value Added (MVA) Trends
- MVA experienced a severe decline from 2017 to 2019, moving from negative 2.24 billion US dollars to a peak deficit of approximately 10.23 billion US dollars. This trend suggests a significant destruction of shareholder value during the first three years of the analyzed period. However, a recovery trend emerged in 2020 and continued into 2021, with MVA improving to negative 1.74 billion US dollars by the end of 2021, representing a narrowing of the gap between market value and invested capital.
- Invested Capital Dynamics
- Invested capital showed a consistent downward trajectory from 2017 to 2020, decreasing from 26.51 billion US dollars to 15.62 billion US dollars. This reduction suggests a strategic contraction of the asset base or a significant return of capital. A slight reversal occurred in 2021, where invested capital rose to 16.53 billion US dollars, indicating a return to capital deployment.
- MVA Spread Ratio Analysis
- The MVA spread ratio mirrors the volatility seen in the absolute MVA figures. The ratio deteriorated sharply from -8.44% in 2017 to a low of -61.46% in 2019, signaling that the return on invested capital fell significantly below the cost of capital. From 2020 onward, the ratio improved markedly, reaching -10.51% by December 31, 2021. While the ratio remains negative, the trajectory indicates a steady move toward value creation and a reduction in the spread between the actual return and the required rate of return.
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MVA Margin
EQT Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | (1,737,043) | (4,630,568) | (10,234,669) | (9,102,950) | (2,237,326) | |
| Sales of natural gas, natural gas liquids and oil | 6,804,020) | 2,650,299) | 3,791,414) | 4,695,519) | 2,651,318) | |
| Performance Ratio | ||||||
| MVA margin2 | -25.53% | -174.72% | -269.94% | -193.86% | -84.39% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 67.80% | — | — | — | — | |
| ConocoPhillips | 143.57% | — | — | — | — | |
| ExxonMobil Holdings Corp. | 41.64% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Sales of natural gas, natural gas liquids and oil
= 100 × -1,737,043 ÷ 6,804,020 = -25.53%
3 Click competitor name to see calculations.
The financial trajectory from 2017 to 2021 is characterized by a period of significant value erosion followed by a strong recovery phase. A persistent negative Market Value Added (MVA) indicates that the market value of the company remained below the capital invested during this five-year window, although the magnitude of this deficit decreased substantially by the end of the period.
- Market Value Added (MVA) Trends
- A downward trend in value creation was observed between 2017 and 2019, with MVA falling from -2,237,326 thousand USD to a peak deficit of -10,234,669 thousand USD. Following 2019, a consistent recovery occurred, with the deficit narrowing to -4,630,568 thousand USD in 2020 and further improving to -1,737,043 thousand USD by December 31, 2021. This suggests a regaining of investor confidence or an improvement in the company's valuation relative to its invested capital.
- Revenue Performance and Volatility
- Sales of natural gas, natural gas liquids, and oil exhibited significant volatility. Revenues increased from 2,651,318 thousand USD in 2017 to 4,695,519 thousand USD in 2018, before experiencing a decline through 2020, reaching a low of 2,650,299 thousand USD. A sharp reversal occurred in 2021, with sales surging to 6,804,020 thousand USD, the highest level in the analyzed period.
- MVA Margin Analysis
- The MVA margin, reflecting value added relative to sales, mirrored the instability of the absolute MVA. The margin deteriorated sharply from -84.39% in 2017 to its lowest point of -269.94% in 2019. The subsequent recovery was rapid, with the margin improving to -174.72% in 2020 and reaching -25.53% in 2021. The marked improvement in 2021 coincides with the peak in sales, suggesting that the increase in revenue played a critical role in narrowing the gap between market value and invested capital.
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