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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- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2010
- Return on Assets (ROA) since 2010
- Price to Book Value (P/BV) since 2010
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MVA
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 financial data reveals several prominent trends in the market value, invested capital, and market value added (MVA) of the company over the five-year period ending in 2021.
- Market (fair) value
- The market value shows a significant upward trend from 2017 to 2020, increasing from approximately $3.9 billion to nearly $22 billion. This represents substantial growth, with a particularly sharp rise between 2019 and 2020. However, there is a decline in 2021, where the market value falls to about $19.2 billion, indicating some volatility or market correction after the prior year’s surge.
- Invested capital
- Invested capital has consistently increased each year, starting at around $1.7 billion in 2017 and reaching approximately $3.8 billion by the end of 2021. The growth is steady and shows a clear trend of ongoing investment in the business, with the most notable increment occurring between 2020 and 2021.
- Market value added (MVA)
- MVA, which represents the difference between the market value and invested capital, mirrors the growth pattern of the market value. It rises significantly from about $2.2 billion in 2017 to a peak of nearly $19.3 billion in 2020, indicating strong value creation for shareholders during this period. Similar to the market value, MVA declines in 2021 to roughly $15.4 billion, reflecting the decrease in market valuation despite the continued rise in invested capital.
Overall, the data indicates a period of robust growth in market value and value creation until 2020, supported by continual increases in invested capital. The decline in market value and MVA in 2021 suggests a shift that might warrant further investigation into external market conditions or company-specific factors affecting valuation during that year.
MVA Spread Ratio
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
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Selected Financial Data (US$ in thousands) | ||||||
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: 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.
Over the analyzed five-year period, the company experienced substantial growth in market value added (MVA), with the figure increasing from approximately 2.19 billion US dollars in 2017 to a peak of around 19.28 billion US dollars in 2020, followed by a decline to about 15.40 billion US dollars in 2021.
Invested capital demonstrated a consistent upward trajectory throughout the period, rising steadily from roughly 1.71 billion US dollars in 2017 to approximately 3.77 billion US dollars by the end of 2021. This indicates a continual increase in resources allocated to the business operations or asset base.
The MVA spread ratio, representing the relationship between market value added and invested capital, exhibited significant volatility. Starting at 127.82% in 2017, it showed a slight decline to 115.53% in 2018, then experienced a notable surge to 244.1% in 2019, followed by an extraordinary peak at 718.21% in 2020. Subsequently, the ratio decreased substantially to 408.41% in 2021, remaining well above the initial levels in 2017 and 2018.
These trends collectively suggest that while the company consistently increased its invested capital, its market valuation expanded at a more pronounced rate particularly between 2019 and 2020, which may reflect heightened market optimism or improved operational performance during that timeframe. The decline in both MVA and the spread ratio in 2021 indicates some correction or adjustment after the peak periods, although the values remained significantly elevated compared to the early years.
MVA Margin
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 | ||||||
Net sales | ||||||
Add: Increase (decrease) in deferred revenue related to extended warranties | ||||||
Adjusted 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: 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 ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data over the five-year period demonstrates significant variability and notable growth in several key metrics.
- Market Value Added (MVA)
- The MVA shows a substantial upward trend from 2017 through 2020, increasing from approximately $2.19 billion to nearly $19.28 billion. This reflects a strong enhancement in the company's market valuation over these years. However, in 2021, there is a noticeable decline in MVA to about $15.40 billion, indicating a contraction from the previous year's peak but remaining significantly above earlier periods.
- Adjusted Net Sales
- Adjusted net sales exhibit a consistent upward trajectory throughout the period. Starting at roughly $1.69 billion in 2017, sales rise steadily each year, reaching approximately $3.76 billion by the end of 2021. This growth demonstrates ongoing expansion in the company's sales base and revenue generation capability.
- MVA Margin
- The MVA margin, expressed as a percentage, follows a volatile pattern with an initial decline from 129.19% in 2017 to 111.94% in 2018. This is followed by a sharp increase to 247.65% in 2019, and a dramatic spike to 772.42% in 2020. In 2021, the margin contracts significantly to 409.75% but remains considerably higher than in the earlier years. This variability indicates fluctuations in the relationship between market value added and net sales, possibly reflecting changing market perceptions or operational efficiency.
Overall, the data reveals strong sales growth and significant increases in market value added, although with some volatility in valuation metrics in the latter years. The sharp changes in the MVA margin suggest that market value expansion has not been strictly proportional to sales growth, implying external factors or changing market conditions impacting company valuation.