Hess Corp. (NYSE:HES)

The analysis of the financial data reveals notable trends across the five-year period ending in 2022. Three key financial metrics are assessed: Market (fair) value of Hess, Invested capital, and Market Value Added (MVA).

Market (fair) value of Hess

This metric exhibits a consistent upward trend throughout the period. Starting at $25,995 million in 2018, it increased moderately through 2019 and 2020, reaching $31,512 million by the end of 2020. A more pronounced growth occurred in 2021, with the value rising to $42,714 million, followed by continued growth to $52,246 million in 2022. The acceleration in market value from 2020 onward suggests increasing investor confidence or improved market conditions favoring the company.

Invested capital

Invested capital shows a different trajectory compared to market value. It decreased from $19,028 million in 2018 to $16,448 million in 2020, reflecting possible divestitures, asset write-downs, or capital efficiency improvements. From 2020 onward, invested capital slightly rebounded, increasing to $18,062 million by 2022, but it remains below the initial 2018 level. This relative stability juxtaposed with market value growth suggests the company may be generating higher returns on a relatively stable asset base.

Market Value Added (MVA)

The MVA indicates the difference between market value and invested capital, representing value created beyond capital invested. This measure shows a significant and continuous increase throughout the period. Beginning at $6,967 million in 2018, it grew steadily to $15,064 million by 2020 and then surged in 2021 and 2022 to $25,829 million and $34,184 million, respectively. The rapid growth in MVA in later years underscores an enhanced capacity to create shareholder value, potentially driven by operational improvements, favorable market conditions, or strategic initiatives.

Overall, the data reflects a scenario where the company's market valuation has grown substantially, particularly in recent years, outpacing changes in invested capital. This divergence has resulted in a pronounced increase in MVA, indicating stronger market perceptions of the company's future prospects and value generation capability.

The financial data illustrates key indicators related to the market value added, invested capital, and MVA spread ratio over a five-year period ending in 2022.

Market Value Added (MVA)

The MVA exhibited a consistent upward trend from 2018 through 2022. Starting at 6,967 million US dollars in 2018, it increased each year, reaching 34,184 million US dollars in 2022. This reflects a nearly fivefold growth over the period, indicating substantial value creation above the invested capital.

Invested Capital

The invested capital shows a mild decline followed by a gradual recovery. It decreased from 19,028 million US dollars in 2018 to a low of 16,448 million US dollars in 2020, then slightly increased in the subsequent years to reach 18,062 million US dollars by 2022. This suggests cautious capital deployment or divestment actions during the earlier years with a modest re-investment afterward.

MVA Spread Ratio

The MVA spread ratio, which measures the efficiency of value creation relative to invested capital, showed a marked upward trend. It increased from 36.62% in 2018 to 189.26% in 2022. This signals a significantly enhanced return on investment over the period, indicating that the company's market value growth far outpaced the invested capital increases.

Overall, the data indicates strong and improving financial performance characterized by substantial market value growth and increased investment efficiency, despite relatively stable invested capital levels. The steep rise in the MVA spread ratio reinforces the interpretation that the company generated exceptional value relative to the capital employed during these years.

Market Value Added (MVA)

The MVA demonstrated a consistent upward trend over the period from 2018 to 2022. Starting at 6,967 million US dollars in 2018, it increased steadily each year, reaching 34,184 million US dollars by the end of 2022. This substantial growth reflects an increasing market valuation beyond the company's invested capital, indicating enhanced shareholder value creation over the five years.

Sales and Other Operating Revenues

Sales and other operating revenues showed variability throughout the period. The revenue figures increased slightly from 6,323 million US dollars in 2018 to 6,495 million in 2019, followed by a significant decline to 4,667 million in 2020. However, a recovery occurred in the subsequent years with revenues rising to 7,473 million in 2021 and accelerating further to 11,324 million US dollars in 2022. This pattern suggests an initial disruption or downturn in 2020, possibly related to external factors, followed by a strong rebound and growth.

MVA Margin

The MVA margin exhibited a notable increasing trend from 2018 through 2021. Starting at 110.19% in 2018, the margin rose sharply to 170.71% in 2019 and then surged to 322.77% in 2020. It peaked at 345.63% in 2021 before slightly decreasing to 301.87% in 2022. Despite the decrease in 2022, the margin remained significantly higher than at the beginning of the period. This indicates an improved efficiency in generating market value relative to sales and operating revenues, especially during and after the 2020 dip in revenue.

Overall Insights

The data reveals resilience and growth potential despite challenges faced in 2020, as evidenced by the revenue drop followed by recovery and the continuous increase in MVA. The rising MVA and MVA margin suggest that the company has been successful in enhancing shareholder value and operational efficiency over the period. The strong rebound and increase in sales from 2021 to 2022 contribute to a positive outlook on the company's financial performance and market perception.