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
Hubbell Inc., 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 »
Hubbell Inc. has demonstrated a consistent and significant increase in Market Value Added (MVA) over the five-year period from 2018 to 2022. This growth is primarily driven by a steady expansion in the market valuation of the company, while the base of invested capital has remained relatively stable.
- Market Value Growth
- The market value of the company exhibited an uninterrupted upward trend, rising from US$ 8,247,142 thousand in 2018 to US$ 14,253,474 thousand by the end of 2022. This represents a substantial increase in the total equity value as perceived by the public markets.
- Invested Capital Stability
- Invested capital remained remarkably consistent throughout the analyzed period. Starting at US$ 4,206,535 thousand in 2018, the figure fluctuated minimally, ending at US$ 4,504,100 thousand in 2022. The lack of significant volatility in invested capital indicates that the growth in market value was not the result of aggressive capital expansion or heavy new investment.
- MVA Expansion
- Market Value Added grew from US$ 4,040,607 thousand in 2018 to US$ 9,749,374 thousand in 2022. The MVA more than doubled over the five-year span, reflecting a widening gap between the market's valuation of the company and the actual capital invested in its operations.
The divergence between the stable invested capital and the rapidly increasing market value suggests strong market confidence in the company's ability to generate returns exceeding its cost of capital. The acceleration of MVA growth, particularly between 2021 and 2022, indicates an increasing premium attributed to the firm's future growth prospects and operational efficiency.
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MVA Spread Ratio
Hubbell Inc., 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 | 9,749,374) | 7,227,626) | 6,363,054) | 5,489,738) | 4,040,607) | |
| Invested capital2 | 4,504,100) | 4,298,100) | 4,325,800) | 4,209,500) | 4,206,535) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 216.46% | 168.16% | 147.10% | 130.41% | 96.06% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | 250.73% | 256.11% | — | — | — | |
| Caterpillar Inc. | 194.33% | 165.08% | — | — | — | |
| Eaton Corp. plc | 149.39% | 132.30% | — | — | — | |
| GE Aerospace | 84.87% | 110.77% | — | — | — | |
| Honeywell International Inc. | 224.23% | 209.78% | — | — | — | |
| Lockheed Martin Corp. | 399.68% | 319.28% | — | — | — | |
| RTX Corp. | 59.03% | 61.85% | — | — | — | |
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 × 9,749,374 ÷ 4,504,100 = 216.46%
4 Click competitor name to see calculations.
A consistent upward trajectory is observed in value creation metrics from 2018 to 2022. The growth in market value has significantly outpaced the growth in invested capital, leading to a substantial increase in the efficiency of capital utilization relative to market valuation.
- Market Value Added (MVA)
- MVA exhibited steady and accelerating growth over the five-year period, rising from US$ 4,040,607 thousand in 2018 to US$ 9,749,374 thousand in 2022. This represents a more than two-fold increase in the value added by the organization beyond the sum of its invested capital, indicating strong market confidence and value generation.
- Invested Capital
- Invested capital remained relatively stable throughout the analyzed period, starting at US$ 4,206,535 thousand in 2018 and ending at US$ 4,504,100 thousand in 2022. The marginal fluctuation in this metric suggests that the increase in market value was not a result of expanded capital investment, but rather an improvement in the productivity and perceived value of the existing capital base.
- MVA Spread Ratio
- The MVA spread ratio demonstrated a strong positive trend, increasing from 96.06% in 2018 to 216.46% in 2022. This expansion reflects a widening gap between the company's internal returns and the market's required rate of return. The acceleration of this ratio confirms a heightened capacity to create shareholder wealth per unit of capital invested.
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MVA Margin
Hubbell Inc., 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 | 9,749,374) | 7,227,626) | 6,363,054) | 5,489,738) | 4,040,607) | |
| Net sales | 4,947,900) | 4,194,100) | 4,186,000) | 4,591,000) | 4,481,700) | |
| Add: Increase (decrease) in contract liabilities, deferred revenue | 29,100) | (13,100) | (100) | 3,300) | 17,500) | |
| Adjusted net sales | 4,977,000) | 4,181,000) | 4,185,900) | 4,594,300) | 4,499,200) | |
| Performance Ratio | ||||||
| MVA margin2 | 195.89% | 172.87% | 152.01% | 119.49% | 89.81% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | 191.47% | 203.39% | — | — | — | |
| Caterpillar Inc. | 188.24% | 190.31% | — | — | — | |
| Eaton Corp. plc | 221.57% | 198.58% | — | — | — | |
| GE Aerospace | 76.94% | 111.81% | — | — | — | |
| Honeywell International Inc. | 295.90% | 293.22% | — | — | — | |
| Lockheed Martin Corp. | 161.14% | 136.30% | — | — | — | |
| RTX Corp. | 96.78% | 107.41% | — | — | — | |
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 ÷ Adjusted net sales
= 100 × 9,749,374 ÷ 4,977,000 = 195.89%
3 Click competitor name to see calculations.
Hubbell Inc. has demonstrated a consistent and significant increase in value creation over the five-year period ending December 31, 2022. While operational revenue experienced fluctuations, the market's valuation of the company relative to its invested capital grew steadily, indicating strong investor confidence and an improving value-creation profile.
- Market Value Added (MVA)
- A continuous upward trajectory is observed in the MVA, which grew from 4,040,607 thousand US dollars in 2018 to 9,749,374 thousand US dollars in 2022. This represents a total increase of approximately 141% over the period, reflecting a substantial expansion in the wealth created for shareholders above the required return on capital.
- Adjusted Net Sales
- Net sales exhibited a non-linear trend, starting at 4,499,200 thousand US dollars in 2018 and peaking at 4,977,000 thousand US dollars in 2022. A contraction is noted between 2019 and 2021, where values dipped to 4,185,900 thousand US dollars and 4,181,000 thousand US dollars, respectively, before rebounding strongly in the final year of the analysis.
- MVA Margin
- The MVA margin showed a monotonic increase throughout the entire period, rising from 89.81% in 2018 to 195.89% in 2022. The fact that the MVA margin continued to rise even during the years of declining adjusted net sales (2020 and 2021) suggests that the increase in market valuation was driven by factors beyond simple revenue growth, such as improved operational efficiency, strategic market positioning, or enhanced profitability expectations.
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