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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General Dynamics Corp. pages available for free this week:
- Statement of Comprehensive Income
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
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MVA
General Dynamics Corp., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of the financial data over the five-year period reveals several notable trends and changes.
- Market (fair) value
- There is a general upward trend in the market value of the company, starting from US$ 45,481 million in 2015 and increasing to US$ 67,785 million by the end of 2019. The market value grew significantly in 2016 and 2017, reaching a peak in 2017, before slightly declining in 2018 and then rising again in 2019.
- Invested capital
- Invested capital showed a steady increase throughout the period, beginning at US$ 18,175 million in 2015 and more than doubling to US$ 31,608 million in 2019. The most significant growth occurred between 2017 and 2018, where invested capital rose sharply from US$ 19,772 million to US$ 29,939 million, indicating increased investment activities during that time frame.
- Market Value Added (MVA)
- The Market Value Added experienced a substantial increase from US$ 27,306 million in 2015 to a high of US$ 47,625 million in 2017. However, this measure declined noticeably in 2018 to US$ 33,875 million and then recovered moderately to US$ 36,177 million in 2019. This pattern suggests that while the company's market value increased overall, the additional value created over the invested capital fluctuated, perhaps reflecting changes in market perception or operational performance.
Overall, these data suggest a company that is growing its capital investments considerably, with its market valuation generally increasing alongside. The volatility in Market Value Added indicates that the market's premium over the invested capital varies year by year, with peak value creation seen in the middle of the period under review and some retraction thereafter.
MVA Spread Ratio
General Dynamics Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
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 notable trends over the five-year period ending in 2019.
- Market Value Added (MVA)
- The MVA shows a general upward trend from 2015 through 2017, increasing from 27,306 million US dollars to a peak of 47,625 million US dollars in 2017. After this peak, there is a marked decline in 2018 to 33,875 million US dollars, followed by a slight recovery to 36,177 million US dollars in 2019. This pattern suggests a strong growth period followed by some contraction and stabilization.
- Invested Capital
- Invested capital steadily increases throughout the period from 18,175 million US dollars in 2015 to 31,608 million US dollars in 2019. The growth is relatively consistent, with a notable jump between 2017 and 2018, indicating increased investment or capital expenditure during that time.
- MVA Spread Ratio
- The MVA spread ratio exhibits a similar trend to the MVA initially, rising from 150.24% in 2015 to a high of 240.87% in 2017, reflecting an enhanced value creation relative to invested capital. However, after 2017, the ratio declines sharply to 113.15% in 2018 and remains almost stable at 114.46% in 2019, indicating diminished returns or value creation efficiency despite increased invested capital.
Overall, the data illustrates a phase of strong value creation and capital efficiency until 2017, followed by a period of reduced market value added and lower efficiency in generating returns on invested capital. The increase in invested capital post-2017 did not translate into proportional market value growth, suggesting potential challenges in capital deployment or market conditions during those years.
MVA Margin
General Dynamics Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Revenue | ||||||
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added showed a general increase from 2015 to 2017, rising from 27,306 million US dollars to a peak of 47,625 million US dollars in 2017. However, after 2017, there was a notable decline in MVA, dropping to 33,875 million US dollars in 2018. A slight recovery occurred in 2019, with MVA increasing to 36,177 million US dollars, though it remained below the peak level observed in 2017.
- Revenue
- Revenue remained relatively stable between 2015 and 2017, ranging narrowly from 31,353 to 31,973 million US dollars. Starting in 2018, there was a marked increase in revenue, reaching 36,193 million US dollars. This upward trend continued into 2019, with revenue closing at 39,350 million US dollars, representing a significant growth over the five-year period.
- MVA Margin
- The MVA margin, expressed as a percentage, followed a pattern similar to the MVA itself. From 2015 to 2017, the margin increased significantly from 86.77% to a high of 153.76%. This was followed by a sharp decline in 2018 to 93.6%, nearly returning to the level of 2015. In 2019, the margin stabilized somewhat at 91.94%, maintaining a level close to the earlier base rather than the elevated peak.
- Overall Trends and Insights
- Over the observed period, revenue demonstrated steady growth, especially in the last two years, signaling an improvement in operational performance or expansion. In contrast, market value added and its related margin showed greater volatility, peaking in 2017 before falling substantially in 2018, suggesting changes in market perception or external factors affecting valuation. The decoupling where revenue continues to grow while MVA metrics decline indicates possible challenges in translating operational gains into market value within the 2018-2019 timeframe.