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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Honeywell International Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Analysis of Revenues
- Analysis of Debt
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MVA
Honeywell International Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data indicates several key trends for the company over the five-year period ending Dec 31, 2024.
- Market (fair) value
- The market value exhibited some fluctuation throughout the period. Starting at $165,314 million in 2020, it declined to $149,775 million in 2021. Thereafter, a mild upward correction occurred, with the value increasing to $153,465 million in 2022 before again dipping slightly to $149,780 million in 2023. In 2024, the market value rebounded significantly to $162,719 million, approaching 2020 levels. This pattern suggests moderate volatility with a general recovery towards the end of the period.
- Invested capital
- Invested capital showed an overall positive trend but with some variability. It started at $49,130 million in 2020 and slightly declined each year until 2022, reaching $47,332 million. In 2023, there was a modest increase to $48,147 million, followed by a notable rise in 2024 to $60,349 million. The sharp increase in 2024 indicates an expansion or reinvestment into the company’s core assets or operations, possibly signaling strategic growth initiatives or capital expenditures that year.
- Market Value Added (MVA)
- The MVA declined from $116,184 million in 2020 to $101,426 million in 2021, mirroring the decrease in market value during that period. There was a partial recovery in 2022, with an increase to $106,133 million, but it dropped again in 2023 to $101,633 million. In 2024, MVA slightly improved to $102,370 million. The pattern indicates fluctuating but relatively stable market value added in recent years. The sizable invested capital increase in 2024 does not appear to have yet translated into a proportionally higher MVA, which might warrant further evaluation of return on invested capital and efficiency of capital deployment.
MVA Spread Ratio
Honeywell International Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2024 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data over the five-year period reveals several important trends in the company's capital efficiency and market valuation metrics.
- Market Value Added (MVA)
- The market value added shows some fluctuation throughout the period. Starting at 116,184 million USD in 2020, it decreased to 101,426 million USD in 2021. It then experienced a slight recovery to 106,133 million USD in 2022, followed by a small decline to 101,633 million USD in 2023 and a marginal increase to 102,370 million USD in 2024. Overall, the MVA exhibits a downward trend from the initial 2020 value, reflecting a reduction in the market’s valuation premium over invested capital.
- Invested Capital
- Invested capital remained relatively stable from 2020 to 2023, ranging between approximately 47,332 million USD and 49,130 million USD. However, in 2024, invested capital increased significantly to 60,349 million USD. This substantial rise implies that the company expanded its capital base markedly in the most recent year analyzed.
- MVA Spread Ratio
- The MVA spread ratio, which measures the premium return generated over the cost of invested capital, shows a declining trend. It started at a high level of 236.48% in 2020 and declined gradually to 209.78% in 2021, increasing modestly to 224.23% in 2022, before dropping again to 211.09% in 2023 and further to 169.63% by 2024. This decline suggests that the company's ability to generate market value over and above the invested capital cost has reduced in relative terms.
In summary, the data reveals that while the market value added and MVA spread ratio have generally decreased over the observed period, indicating possible challenges in sustaining previous levels of market appreciation relative to invested capital, the notable increase in invested capital in the last year could signal new investments or strategic initiatives that may impact future financial performance and market valuation dynamics.
MVA Margin
Honeywell International Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 MVA. See details »
2 2024 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several key trends over the five-year period ending December 31, 2024. Market value added (MVA), adjusted net sales, and MVA margin exhibit variations reflecting the company's shifting market valuation and sales performance.
- Market Value Added (MVA)
- The MVA shows a peak in 2020 at 116,184 million US dollars, followed by a decline to 101,426 million in 2021. After a slight recovery to 106,133 million in 2022, it decreased again in 2023 to 101,633 million and then remained relatively stable at 102,370 million in 2024. This pattern indicates an overall reduction from the initial peak with fluctuations but no strong upward trend in the later years.
- Adjusted Net Sales
- Adjusted net sales have demonstrated consistent growth year over year. Starting at 33,125 million US dollars in 2020, sales increased steadily to 34,591 million in 2021, 35,868 million in 2022, 36,443 million in 2023, and reached 38,524 million in 2024. The upward trend suggests sustained improvement in revenue generation throughout the period under review.
- MVA Margin
- The MVA margin shows a declining trend, starting at 350.74% in 2020 and decreasing continuously each year to 293.22% in 2021, 295.9% in 2022, 278.88% in 2023, and down to 265.73% in 2024. This decline represents a reduction in the market value added relative to adjusted net sales, signaling a potentially diminishing market premium or increasing sales base relative to the company’s market valuation.
In summary, while adjusted net sales have steadily increased, market value added has not shown corresponding growth and has declined overall since 2020. Concurrently, declining MVA margins indicate a decrease in the market value premium relative to sales, suggesting market valuation may not be keeping pace with revenue growth during this period.