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
Hewlett Packard Enterprise Co., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial analysis of Market Value Added (MVA) from 2018 to 2023 reveals a persistent negative valuation gap, indicating that the market's fair value of the entity has consistently remained below the total invested capital throughout the observed period.
- Market Value Trends
- The market value experienced volatility, reaching a peak of 38,560 million US$ in 2019 before declining. Between 2020 and 2023, the valuation fluctuated within a relatively narrow range between 33,764 million US$ and 35,514 million US$, suggesting a period of market stabilization.
- Invested Capital Trajectory
- Invested capital exhibited a gradual decline from 44,277 million US$ in 2018 to a low of 41,543 million US$ in 2022. A slight increase was recorded in 2023, with the figure rising to 43,254 million US$.
- Market Value Added (MVA) Performance
- MVA remained negative for the entire six-year duration. The most significant reduction in the deficit occurred in 2019, when MVA rose to -4,726 million US$. This was followed by a sharp decline in 2020 to -8,676 million US$, marking the lowest point in the series. From 2021 through 2023, the MVA remained relatively stagnant, oscillating between -7,522 million US$ and -7,740 million US$.
The sustained negative MVA indicates that the company has not generated a market value exceeding the capital invested in its operations. The correlation between the peak market value in 2019 and the corresponding narrowing of the MVA deficit suggests that fluctuations in market sentiment have been the primary driver of MVA changes, as invested capital remained comparatively stable.
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MVA Spread Ratio
Hewlett Packard Enterprise Co., MVA spread ratio calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | (7,740) | (7,522) | (7,552) | (8,676) | (4,726) | (8,332) | |
| Invested capital2 | 43,254) | 41,543) | 42,837) | 42,440) | 43,287) | 44,277) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | -17.89% | -18.11% | -17.63% | -20.44% | -10.92% | -18.82% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Apple Inc. | 4,423.16% | 5,157.62% | 5,626.48% | — | — | — | |
| Arista Networks Inc. | 1,575.63% | 1,226.33% | 1,872.91% | — | — | — | |
| Cisco Systems Inc. | 279.75% | 214.20% | 329.31% | — | — | — | |
| Dell Technologies Inc. | 2.11% | 31.48% | 53.40% | — | — | — | |
| Lumentum Holdings Inc. | 73.48% | 196.72% | 256.49% | — | — | — | |
| Super Micro Computer Inc. | 466.63% | 91.12% | 50.17% | — | — | — | |
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × -7,740 ÷ 43,254 = -17.89%
4 Click competitor name to see calculations.
The financial performance from 2018 to 2023 reveals a persistent inability to generate positive market value, as indicated by consistently negative Market Value Added (MVA) and MVA spread ratios. Throughout the analyzed period, the market valuation of the organization remained below the total invested capital, signifying a chronic destruction of shareholder value.
- Market Value Added (MVA)
- The MVA remained negative for all six years, fluctuating between a high of -4,726 million USD in 2019 and a low of -8,676 million USD in 2020. A temporary recovery occurred in 2019, but the value regressed sharply in 2020 and remained depressed through 2023, ending the period at -7,740 million USD.
- Invested Capital
- Invested capital exhibited relative stability, ranging from a minimum of 41,543 million USD in 2022 to a maximum of 44,277 million USD in 2018. The absence of significant growth or contraction in the capital base suggests that the negative MVA is primarily driven by market valuation trends rather than drastic changes in the underlying investment scale.
- MVA Spread Ratio
- The MVA spread ratio mirrored the trajectory of the MVA, remaining negative throughout the period. After an improvement to -10.92% in 2019, the ratio deteriorated to its lowest point of -20.44% in 2020. For the subsequent three years, the ratio stabilized between -17.63% and -18.11%, indicating a consistent trend where the market value underperformed the invested capital by approximately 18%.
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MVA Margin
Hewlett Packard Enterprise Co., MVA margin calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | (7,740) | (7,522) | (7,552) | (8,676) | (4,726) | (8,332) | |
| Net revenue | 29,135) | 28,496) | 27,784) | 26,982) | 29,135) | 30,852) | |
| Add: Increase (decrease) in deferred revenue | 533) | 26) | 165) | 230) | 162) | 208) | |
| Adjusted net revenue | 29,668) | 28,522) | 27,949) | 27,212) | 29,297) | 31,060) | |
| Performance Ratio | |||||||
| MVA margin2 | -26.09% | -26.37% | -27.02% | -31.88% | -16.13% | -26.83% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Apple Inc. | 695.76% | 609.53% | 653.71% | — | — | — | |
| Arista Networks Inc. | 1,189.41% | 844.93% | 1,097.06% | — | — | — | |
| Cisco Systems Inc. | 278.31% | 240.26% | 367.17% | — | — | — | |
| Dell Technologies Inc. | 1.17% | 16.47% | 45.88% | — | — | — | |
| Lumentum Holdings Inc. | 120.58% | 287.34% | 289.28% | — | — | — | |
| Super Micro Computer Inc. | 158.10% | 38.75% | 18.09% | — | — | — | |
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenue
= 100 × -7,740 ÷ 29,668 = -26.09%
3 Click competitor name to see calculations.
The analysis of market value added (MVA) and its corresponding margin reveals a persistent trend of value destruction over the six-year period from 2018 to 2023. Throughout this timeframe, the MVA remained consistently negative, indicating that the market valuation of the entity has stayed below the total capital invested.
- Market Value Added (MVA) Trends
- MVA exhibited notable volatility between 2018 and 2020, reaching a relative peak in 2019 at -4,726 million before dropping to its lowest point of -8,676 million in 2020. From 2021 onward, the figure entered a period of relative stability, fluctuating within a narrow range between -7,522 million and -7,740 million, suggesting a plateau in market perception regarding value creation.
- Adjusted Net Revenue Correlation
- Adjusted net revenue experienced a downward trajectory from 31,060 million in 2018 to a trough of 27,212 million in 2020. Following this decline, a gradual recovery was observed, with revenue increasing steadily to 29,668 million by 2023. The period of the most significant MVA contraction in 2020 coincided with the lowest recorded adjusted net revenue, indicating a correlation between revenue contraction and the decline in market value added.
- MVA Margin Analysis
- The MVA margin remained negative across all reported years, reflecting the trends seen in the absolute MVA figures. The margin improved to -16.13% in 2019 before deteriorating sharply to -31.88% in 2020. Since 2020, a marginal but consistent upward trend has been observed, with the margin moving from -27.02% in 2021 to -26.09% in 2023. This movement suggests a slight reduction in the scale of value destruction relative to the company's revenue base.
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