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
Hess Corp., MVA calculation
US$ in millions
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 »
Between 2018 and 2022, a significant and consistent expansion in Market Value Added (MVA) is observed, indicating a substantial increase in the wealth created for shareholders over and above the capital invested in the entity.
- Market Value Trajectory
- The market value exhibited an uninterrupted upward trend, rising from US$ 25,995 million in 2018 to US$ 52,246 million by the end of 2022. A notable acceleration in valuation occurred between 2020 and 2021, during which the market value increased by approximately 35.5%.
- Invested Capital Dynamics
- Invested capital demonstrated a non-linear trend, characterized by a decline from US$ 19,028 million in 2018 to a period low of US$ 16,448 million in 2020. A gradual recovery followed, with the figure reaching US$ 18,062 million in 2022; however, the total invested capital remained below 2018 levels throughout the analyzed timeframe.
- Market Value Added (MVA) Analysis
- MVA grew aggressively throughout the five-year period, increasing from US$ 6,967 million in 2018 to US$ 34,184 million in 2022. This represents a nearly fivefold increase in the value added to the business. The widening gap between the rising market value and the relatively stable invested capital indicates that the market's valuation of the company's future growth and profitability has outpaced the growth of its physical and financial capital base.
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MVA Spread Ratio
Hess Corp., 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 millions) | ||||||
| Market value added (MVA)1 | 34,184) | 25,829) | 15,064) | 11,087) | 6,967) | |
| Invested capital2 | 18,062) | 16,885) | 16,448) | 18,672) | 19,028) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 189.26% | 152.97% | 91.58% | 59.38% | 36.62% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 57.71% | 54.49% | — | — | — | |
| ConocoPhillips | 93.55% | 86.17% | — | — | — | |
| Exxon Mobil Corp. | 67.23% | 42.25% | — | — | — | |
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 × 34,184 ÷ 18,062 = 189.26%
4 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a significant and consistent expansion in market value creation relative to the capital invested in the organization.
- Market Value Added (MVA)
- A strong upward trajectory is observed in the MVA, which grew from 6,967 million US dollars in 2018 to 34,184 million US dollars by the end of 2022. This represents a substantial increase in the premium the market assigns to the company over its invested capital, indicating growing investor confidence and perceived future profitability.
- Invested Capital Trends
- Invested capital exhibited relative stability with a slight downward trend in the early part of the period, reaching a low of 16,448 million US dollars in 2020 before recovering to 18,062 million US dollars by 2022. The fact that MVA rose sharply while invested capital remained relatively flat suggests that value creation was driven by operational performance or market sentiment rather than simply increasing the scale of investment.
- MVA Spread Ratio Performance
- The MVA spread ratio demonstrates an exponential increase, rising from 36.62% in 2018 to 189.26% in 2022. This progression indicates that the efficiency of value creation has accelerated rapidly, with the market value added far exceeding the base of invested capital toward the end of the analyzed period.
Overall, the divergence between the relatively stable invested capital and the rapidly climbing MVA spread ratio points to a period of high value accretion, where the company has successfully leveraged its asset base to generate a significantly higher market valuation.
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MVA Margin
Hess Corp., 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 millions) | ||||||
| Market value added (MVA)1 | 34,184) | 25,829) | 15,064) | 11,087) | 6,967) | |
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Performance Ratio | ||||||
| MVA margin2 | 301.87% | 345.63% | 322.77% | 170.71% | 110.19% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 51.99% | 67.80% | — | — | — | |
| ConocoPhillips | 90.01% | 143.57% | — | — | — | |
| Exxon Mobil Corp. | 50.09% | 41.64% | — | — | — | |
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 ÷ Sales and other operating revenues
= 100 × 34,184 ÷ 11,324 = 301.87%
3 Click competitor name to see calculations.
Between 2018 and 2022, a sustained and significant expansion in the market's valuation of the entity relative to its invested capital is evident. Market Value Added grew monotonically over the five-year period, rising from 6,967 million US$ to 34,184 million US$. This growth occurred despite volatility in operating revenues, which experienced a notable contraction in 2020 before rebounding to a period peak in 2022.
- Market Value Added (MVA) Trend
- A continuous upward trajectory is observed, with MVA increasing in every consecutive year. The most substantial absolute increase occurred between 2020 and 2021, where the value rose from 15,064 million US$ to 25,829 million US$, indicating a surge in market premium and investor confidence during this timeframe.
- Revenue Dynamics
- Sales and other operating revenues exhibited a non-linear trend, decreasing from 6,495 million US$ in 2019 to 4,667 million US$ in 2020. A strong recovery followed, with revenues climbing to 11,324 million US$ by December 31, 2022, representing an increase of approximately 79% compared to 2018 levels.
- MVA Margin Analysis
- The MVA margin demonstrated aggressive growth, ascending from 110.19% in 2018 to a peak of 345.63% in 2021. An inverse correlation between revenues and the margin was observable in 2020; as revenues declined, the MVA margin spiked to 322.77% due to the continued rise in MVA. By 2022, the margin moderated slightly to 301.87%, as the rapid growth in operating revenues began to outpace the growth rate of the market value added.
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