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
Marathon Oil Corp., MVA calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The Market Value Added (MVA) for Marathon Oil Corp. exhibited substantial volatility between 2017 and 2021, transitioning from positive value creation to a period of value destruction, and finally returning to a strong positive position.
- Market Value Trends
- The market value remained relatively stable between 2017 and 2018 before experiencing a sharp contraction in 2019, dropping to 14,539 million US$. A recovery phase followed, culminating in a five-year peak of 20,794 million US$ by December 31, 2021.
- Invested Capital Trajectory
- Invested capital showed a general downward trend over the observed period. After remaining relatively flat through 2019, a consistent decline was observed in 2020 and 2021, ending at 14,862 million US$. This reduction in the capital base coincided with the recovery of the market valuation.
- Market Value Added (MVA) Analysis
- Value creation was positive in 2017 and 2018, reaching 1,741 million US$ in the latter year. A significant reversal occurred in 2019, where MVA fell to -3,415 million US$, indicating that the market valuation dropped below the total capital invested. While this deficit narrowed in 2020 to -1,194 million US$, a sharp turnaround occurred in 2021, with MVA surging to 5,932 million US$. This final surge indicates a substantial expansion of shareholder value relative to the invested capital.
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MVA Spread Ratio
Marathon Oil Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 5,932) | (1,194) | (3,415) | 1,741) | 1,255) | |
| Invested capital2 | 14,862) | 16,214) | 17,954) | 17,565) | 17,726) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 39.92% | -7.36% | -19.02% | 9.91% | 7.08% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 54.49% | — | — | — | — | |
| ConocoPhillips | 86.17% | — | — | — | — | |
| Exxon Mobil Corp. | 42.25% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 5,932 ÷ 14,862 = 39.92%
4 Click competitor name to see calculations.
The financial period from 2017 to 2021 is characterized by extreme volatility in market value creation, transitioning from modest growth to significant value destruction, followed by a sharp recovery.
- Market Value Added (MVA)
- Initial positive value creation was observed in 2017 and 2018, with MVA increasing from 1,255 million US dollars to 1,741 million US dollars. A severe reversal occurred in 2019, as the figure plummeted to negative 3,415 million US dollars, indicating that the market valuation fell below the total invested capital. Although 2020 showed a reduction in value destruction to negative 1,194 million US dollars, the most significant shift occurred in 2021, where MVA surged to a peak of 5,932 million US dollars.
- Invested Capital
- The capital base remained relatively stable between 2017 and 2019, hovering between 17,565 million and 17,954 million US dollars. A contraction phase began in 2020, with invested capital declining to 16,214 million US dollars and continuing downward to 14,862 million US dollars by the end of 2021. This suggests a reduction in the company's capital employment during the same period that market value was recovering.
- MVA Spread Ratio
- The spread ratio mirrored the volatility of the MVA, rising slightly from 7.08% in 2017 to 9.91% in 2018 before collapsing to -19.02% in 2019. The negative ratios in 2019 and 2020 highlight a period where the market perceived the company as failing to generate returns above its cost of capital. This trend reversed aggressively in 2021, with the ratio climbing to 39.92%, representing a substantial premium of market value over invested capital.
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MVA Margin
Marathon Oil Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 5,932) | (1,194) | (3,415) | 1,741) | 1,255) | |
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Performance Ratio | ||||||
| MVA margin2 | 105.92% | -38.55% | -67.44% | 29.49% | 28.71% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 67.80% | — | — | — | — | |
| ConocoPhillips | 143.57% | — | — | — | — | |
| Exxon Mobil Corp. | 41.64% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Revenues
= 100 × 5,932 ÷ 5,601 = 105.92%
3 Click competitor name to see calculations.
The financial trajectory of Market Value Added (MVA) and the corresponding MVA margin exhibits high volatility from 2017 to 2021, characterized by a period of significant value erosion followed by a robust recovery in the final year.
- Market Value Added (MVA) Trends
- Positive value creation was observed in 2017 and 2018, with MVA increasing from 1,255 million USD to 1,741 million USD. A sharp reversal occurred in 2019, where MVA transitioned to a negative value of 3,415 million USD. While this deficit narrowed to 1,194 million USD in 2020, a substantial recovery was achieved by December 31, 2021, reaching a period high of 5,932 million USD.
- Revenue Correlation
- Revenue fluctuations generally aligned with MVA movements. Following an increase to 5,902 million USD in 2018, revenues declined steadily, reaching a low of 3,097 million USD in 2020. The recovery in 2021, with revenues rising to 5,601 million USD, coincided with the significant rebound in market valuation.
- MVA Margin Performance
- The MVA margin remained stable and positive at approximately 29% during 2017 and 2018. A severe contraction was noted in 2019, with the margin dropping to negative 67.44%. A partial recovery occurred in 2020, with the margin improving to negative 38.55%. By 2021, the margin experienced an exponential increase to 105.92%, indicating that the market value added exceeded the total revenue generated for that fiscal year.
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