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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- Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Aggregate Accruals
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MVA
Emerson Electric Co., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 Fair value of debt. See details »
2 Invested capital. See details »
- Market (fair) value of Emerson
- The market (fair) value of the company exhibited a fluctuating trend over the six-year period. It started at 51,790 million USD in 2014, then declined significantly to 40,761 million USD in 2015. Following this drop, the value showed a gradual recovery, increasing to 43,056 million USD in 2016, 44,186 million USD in 2017, and continuing upward to reach 48,397 million USD in 2018 and 51,211 million USD in 2019. Despite the initial decrease, the overall trajectory after 2015 reflects a positive growth pattern.
- Invested capital
- Invested capital demonstrated a general downward trend from 2014 to 2017, starting at 17,628 million USD and decreasing annually to reach a low of 15,181 million USD in 2017. In 2018 and 2019, the invested capital showed a modest increase, rising to 15,617 million USD and then 16,266 million USD respectively. This pattern indicates initial contraction followed by a slight reversal in the invested capital base during the latter years.
- Market value added (MVA)
- The market value added showed a similar trend to the market (fair) value of the company. Beginning at 34,162 million USD in 2014, MVA declined sharply in 2015 to 23,433 million USD. Subsequently, it recovered steadily year-over-year, rising to 26,535 million USD (2016), 29,005 million USD (2017), 32,780 million USD (2018), and ultimately 34,945 million USD in 2019. This recovery suggests enhanced value creation for shareholders after the significant downturn in 2015.
- Summary and Insights
- The analysis reveals a period of challenge in 2015 where both market value and MVA experienced a substantial decline. Following this, the company managed to improve its market position consistently through 2019. Invested capital contracted between 2014 and 2017 but showed modest growth thereafter, indicating a selective increase in investment. The alignment of rising market value and MVA after 2015 suggests effective value generation strategies were implemented to restore and enhance shareholder value.
MVA Spread Ratio
Emerson Electric Co., MVA spread ratio calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| 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. | |||||||
| Caterpillar Inc. | |||||||
| Eaton Corp. plc | |||||||
| GE Aerospace | |||||||
| Honeywell International Inc. | |||||||
| Lockheed Martin Corp. | |||||||
| RTX Corp. | |||||||
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several noteworthy trends in the company's market value added (MVA), invested capital, and MVA spread ratio over the six-year period ending September 30, 2019.
- Market Value Added (MVA)
-
The MVA exhibits a fluctuating but overall upward trajectory. Initially, there is a marked decline from 34,162 million US dollars in 2014 to 23,433 million in 2015, representing a substantial decrease. Following this low point, MVA progressively increases each year, rising to 26,535 million in 2016 and continuing upward to reach 34,945 million in 2019, ultimately surpassing the initial 2014 level. This trend indicates a recovery and strengthening of market value over the latter part of the period.
- Invested Capital
-
Invested capital shows a decreasing trend during the initial years, falling from 17,628 million US dollars in 2014 to a trough of 15,181 million in 2017. After this decline, invested capital experiences a moderate upward adjustment, increasing to 16,266 million by 2019. The initial reduction in capital investment suggests a period of capital optimization or divestment, followed by a measured reinvestment phase.
- MVA Spread Ratio
-
The MVA spread ratio mirrors the overall pattern observed in MVA, although with a different scale and variation. This ratio sharply decreases from 193.79% in 2014 to 135.23% in 2015, indicating a significant contraction in the spread between returns and cost of capital. Subsequently, the ratio rebounds robustly, increasing steadily each year and reaching 214.84% in 2019, the highest value in the observed period. This improvement reflects enhanced value creation efficiency relative to the invested capital over time.
In summary, the data portrays an initial period of decline in value metrics followed by recovery and growth in market value added and efficiency indicators. Invested capital trends suggest strategic capital management aligning with these value shifts. The sustained increase in MVA and MVA spread ratio during the latter years signifies successful efforts in generating returns exceeding capital costs.
MVA Margin
Emerson Electric Co., MVA margin calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | |||||||
| Net sales | |||||||
| Performance Ratio | |||||||
| MVA margin2 | |||||||
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Boeing Co. | |||||||
| Caterpillar Inc. | |||||||
| Eaton Corp. plc | |||||||
| GE Aerospace | |||||||
| Honeywell International Inc. | |||||||
| Lockheed Martin Corp. | |||||||
| RTX Corp. | |||||||
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The Market Value Added exhibited an overall upward trend from 2015 onward, starting at 23,433 million USD in 2015 and increasing steadily each year to reach 34,945 million USD by 2019. The initial decrease from 34,162 million USD in 2014 to 23,433 million USD in 2015 marks a significant decline, but subsequent years show consistent recovery and growth.
- Net Sales
- Net sales demonstrated a declining trend from 2014 to 2016, dropping sharply from 24,537 million USD in 2014 to 14,522 million USD in 2016. However, following this decline, net sales showed a gradual recovery, increasing year-over-year to 18,372 million USD in 2019. Despite this recovery, the 2019 net sales figure remains below the levels observed in 2014.
- MVA margin
- The MVA margin percentage experienced considerable volatility over the observed period. It declined markedly from 139.23% in 2014 to 105.06% in 2015. From 2015 onward, the margin improved significantly and remained elevated, reaching a peak of 190.21% in 2019. This indicates that the market value added relative to net sales strengthened substantially after 2015, reflecting improved market appreciation per unit of sales.