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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- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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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 »
The analysis of the annual financial data reveals notable shifts in the market value and invested capital over the five-year period.
- Market (fair) value
- The market value experienced significant fluctuations. Starting at approximately 24.3 billion USD in 2017, it dropped sharply to about 9.3 billion USD in 2018. This decline continued into 2019 with a further reduction to around 6.4 billion USD. A recovery phase ensued, with values rising to nearly 11.0 billion USD in 2020 and further increasing to approximately 14.8 billion USD by the end of 2021. The pattern suggests a severe market valuation contraction followed by a gradual resurgence.
- Invested capital
- The invested capital also showed a declining trend from 26.5 billion USD in 2017 to 18.4 billion USD in 2018. This downward trajectory persisted into 2019 and 2020, reaching lows of approximately 16.7 billion USD and 15.6 billion USD respectively. In 2021, a modest increase to 16.5 billion USD was observed. Overall, invested capital diminished substantially over the period, with a minor recovery in the final year.
- Market Value Added (MVA)
- MVA remained negative throughout the period, indicating that the market value consistently fell short of the invested capital. The negative gap widened sharply from -2.2 billion USD in 2017 to -9.1 billion USD in 2018 and further to over -10.2 billion USD in 2019, suggesting deteriorating market perception or returns relative to invested capital. A reduction in the negative gap followed in 2020 and 2021, shrinking to approximately -4.6 billion USD and -1.7 billion USD respectively, signaling an improvement in value creation though still negative.
In summary, the data reflect a period marked by significant declines in both market value and invested capital, with substantial negative MVA values indicating diminished shareholder value creation. The latter years show a recovery trend in market value and a narrowing of the negative MVA gap, suggesting a potential stabilization or improvement in financial performance and market confidence.
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals significant fluctuations in market value added (MVA) and related ratios for the periods under review. There is a consistent negative MVA across all years, indicating that the market value has been below the invested capital throughout the period.
- Market Value Added (MVA)
- The MVA shows a considerable decline from 2017 through 2019, reaching its lowest point in 2019 at approximately -10.23 billion US dollars. Subsequent years reflect some recovery, with the negative MVA lessening to about -4.63 billion in 2020 and further improving to approximately -1.74 billion by the end of 2021. This trend suggests a partial rebound in market valuation relative to invested capital after a period of deep underperformance.
- Invested Capital
- Invested capital experienced a downward trend from 2017 to 2020, decreasing from around 26.5 billion to approximately 15.6 billion US dollars. However, in 2021, this figure increased somewhat to about 16.5 billion US dollars. This fluctuation indicates that the company may have been reducing its capital base or divesting assets during the earlier years, followed by slight reinvestment or capital growth in the final year observed.
- MVA Spread Ratio
- The MVA spread ratio, representing market value added as a percentage of invested capital, exhibits a parallel pattern to MVA figures. The ratio worsened markedly from -8.44% in 2017 to its lowest point of -61.46% in 2019. Thereafter, it shows notable improvement, climbing to -29.64% in 2020 and further to -10.51% by 2021. Despite this positive trend, the negative values throughout indicate persistent challenges in generating market value in excess of invested capital.
Overall, the data depicts a period of significant impairment in market value relative to investments, reaching a peak of underperformance in 2019. The subsequent years through 2021 demonstrate meaningful recovery efforts, both in MVA and its proportional ratios, along with a stabilization and modest growth in invested capital. Nonetheless, the continued negative results suggest that while the company is improving its market-related metrics, it had yet to fully overcome earlier challenges by the end of 2021.
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 | ||||||
| Sales of natural gas, natural gas liquids and oil | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2021.
- Market Value Added (MVA)
- The company experienced negative MVA throughout the entire period, indicating that the market value was consistently below the invested capital. The deficit was deepest in 2019 at approximately -$10.2 billion (US$ thousands), followed by a decline of similar magnitude in 2018. Although the negative balance improved in 2020 and 2021, it remained significantly below zero, ending at around -$1.7 billion in 2021. This trend suggests challenges in value creation as perceived by the market, with partial recovery observed in the latter years.
- Sales of Natural Gas, Natural Gas Liquids, and Oil
- Sales showed considerable volatility over the period. There was a marked increase from 2017 to 2018, rising from approximately $2.65 billion to $4.7 billion. However, sales declined in 2019 and further in 2020, reaching a low point of about $2.65 billion in 2020. A strong rebound occurred in 2021, with sales surging to more than $6.8 billion, surpassing previous years’ levels. This pattern indicates a cyclical nature in sales revenue, with 2021 showing a significant recovery and growth.
- MVA Margin
- The MVA margin remained consistently negative, reflecting the ongoing challenge of generating market value above the invested capital relative to sales. The margin was worst in 2019 at nearly -270%, indicating a substantial market value deficit compared to sales. Improvement was observed in 2020 and particularly in 2021, when the margin improved to -25.53%. This positive movement implies better capital market perception relative to sales in the most recent year but still reflects value destruction overall.
In summary, while sales have demonstrated variability with a strong recovery in the latest year, the company has consistently faced issues related to market value creation as shown by persistent negative MVA and MVA margin values. The improving trends in 2020 and 2021, however, suggest some progress in value perception and operational performance.