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
Hershey Co., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
A comprehensive analysis of the financial data from December 31, 2018, to December 31, 2022, reveals a significant and consistent expansion in shareholder value creation. The organization has demonstrated a strong ability to generate a market valuation that substantially exceeds the capital invested in the business, indicating high investor confidence and perceived future growth potential.
- Market Valuation Trends
- The market value experienced a robust upward trajectory, increasing from approximately 27.6 billion US dollars in 2018 to 53.7 billion US dollars by 2022. While a slight contraction occurred in 2020, where value dipped to 36.6 billion US dollars from a 2019 peak of 38.2 billion US dollars, the recovery was rapid and aggressive, culminating in a nearly 94% total increase over the five-year period.
- Invested Capital Trajectory
- Invested capital showed a steady and incremental rise, moving from 6.5 billion US dollars in 2018 to 8.8 billion US dollars in 2022. This gradual growth suggests a disciplined approach to capital deployment, as the increase in the capital base remained modest compared to the explosive growth in overall market valuation.
- Market Value Added (MVA) Performance
- The MVA grew substantially from 21.1 billion US dollars in 2018 to 45.0 billion US dollars in 2022. This expansion confirms that the market is attributing a premium to the company's intangible assets, brand equity, and strategic positioning that far outweighs the physical and financial capital invested. The widening gap between market value and invested capital suggests an increasing efficiency in value creation per unit of capital employed.
Overall, the financial pattern indicates a high-performance scenario where the market's perception of the firm's value is accelerating at a much faster rate than the underlying investment in the business. The resilience shown after the 2020 dip further underscores the strength of the market's valuation of the company's long-term earning power.
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MVA Spread Ratio
Hershey Co., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 44,973,798) | 38,614,099) | 29,040,753) | 31,501,445) | 21,104,259) | |
| Invested capital2 | 8,759,552) | 8,529,610) | 7,520,057) | 6,702,394) | 6,545,593) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 513.43% | 452.71% | 386.18% | 470.00% | 322.42% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 267.55% | 289.24% | — | — | — | |
| Mondelēz International Inc. | 73.56% | 85.16% | — | — | — | |
| PepsiCo Inc. | 296.11% | 297.67% | — | — | — | |
| Philip Morris International Inc. | 327.97% | 585.34% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 44,973,798 ÷ 8,759,552 = 513.43%
4 Click competitor name to see calculations.
Between 2018 and 2022, a strong upward trajectory is observed in both the absolute market value added and the efficiency of capital utilization. While a temporary fluctuation occurred in 2020, the overall period is characterized by significant expansion in shareholder value creation relative to the capital employed.
- Market Value Added (MVA)
- The MVA experienced substantial growth, rising from approximately $21.1 billion in 2018 to $45.0 billion by the end of 2022. Although a moderate decline was recorded in 2020, where the value dipped to $29.0 billion from a 2019 level of $31.5 billion, a strong recovery followed in the subsequent two years. This overall increase suggests that the market's valuation of the company's future growth prospects expanded significantly over the five-year period.
- Invested Capital
- Invested capital showed a consistent and steady increase year-over-year, growing from $6.5 billion in 2018 to $8.8 billion in 2022. This linear growth pattern indicates a sustained commitment to capital deployment and an expansion of the company's asset base to support its strategic objectives.
- MVA Spread Ratio
- The MVA spread ratio increased from 322.42% in 2018 to 513.43% in 2022, indicating that value creation accelerated relative to the capital invested. A peak of 470.00% was reached in 2019, followed by a contraction to 386.18% in 2020. The subsequent rise to 513.43% by 2022 confirms that the growth in market value significantly outpaced the growth in invested capital, reflecting enhanced operational efficiency and market confidence.
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MVA Margin
Hershey Co., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 44,973,798) | 38,614,099) | 29,040,753) | 31,501,445) | 21,104,259) | |
| Net sales | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) | |
| Performance Ratio | ||||||
| MVA margin2 | 431.64% | 430.42% | 356.34% | 394.45% | 270.88% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Coca-Cola Co. | 497.46% | 600.94% | — | — | — | |
| Mondelēz International Inc. | 149.09% | 182.53% | — | — | — | |
| PepsiCo Inc. | 238.05% | 261.55% | — | — | — | |
| Philip Morris International Inc. | 489.05% | 543.41% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 44,973,798 ÷ 10,419,294 = 431.64%
3 Click competitor name to see calculations.
The financial performance between 2018 and 2022 demonstrates a significant expansion in market value relative to revenue. Market Value Added (MVA) experienced a strong overall upward trajectory, increasing from approximately 21.1 billion USD in 2018 to nearly 45 billion USD by the end of 2022. This trend indicates a substantial increase in the company's market valuation beyond the capital invested in the business.
- Market Value Added (MVA) Trends
- MVA showed robust growth over the five-year period. A sharp increase occurred between 2018 and 2019, followed by a slight contraction in 2020. This was succeeded by a period of accelerated growth in 2021 and 2022, with the final value of 44,973,798 thousand USD representing a more than two-fold increase compared to the 2018 baseline.
- Net Sales Performance
- Net sales exhibited a consistent and steady year-over-year increase. Revenue grew from 7,791,069 thousand USD in 2018 to 10,419,294 thousand USD in 2022. The growth pattern is linear and stable, providing a consistent foundation for the increase in overall market value.
- MVA Margin Analysis
- The MVA margin, representing the ratio of market value added to net sales, improved significantly from 270.88% in 2018 to 431.64% in 2022. Although a temporary dip to 356.34% was observed in 2020, the margin recovered and stabilized above 430% in the final two years. This indicates that market value creation has outpaced the growth rate of net sales, reflecting enhanced investor confidence and perceived value generation efficiency.
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