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
Norfolk Southern 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 »
Between 2017 and 2021, a consistent upward trajectory in market valuation was observed. While the amount of invested capital remained relatively stable, the market value expanded significantly, resulting in a substantial increase in Market Value Added (MVA). This divergence indicates that the market attributed increasing value to the entity's intangible assets and future growth prospects relative to its physical and financial capital investments.
- Market Capitalization Trend
- The market value increased steadily each year, rising from 51,736 million USD in 2017 to 82,287 million USD by the end of 2021. This represents a total increase of approximately 59% over the analyzed period, reflecting strong and sustained investor confidence.
- Invested Capital Analysis
- Invested capital demonstrated minimal volatility, growing modestly from 33,382 million USD in 2017 to 35,469 million USD in 2021. The stability of this metric suggests that the expansion in market value was not a result of increased capital infusions or aggressive asset acquisition.
- Market Value Added (MVA) Performance
- MVA experienced significant acceleration, climbing from 18,354 million USD in 2017 to 46,818 million USD in 2021. The growth in MVA more than doubled over the five-year window, signaling a substantial increase in the premium that investors were willing to pay over the actual capital invested in the business.
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MVA Spread Ratio
Norfolk Southern 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 | 46,818) | 43,532) | 34,949) | 24,524) | 18,354) | |
| Invested capital2 | 35,469) | 35,427) | 35,233) | 34,104) | 33,382) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 132.00% | 122.88% | 99.19% | 71.91% | 54.98% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | 83.76% | — | — | — | — | |
| Uber Technologies Inc. | 331.50% | — | — | — | — | |
| Union Pacific Corp. | 224.50% | — | — | — | — | |
| United Airlines Holdings Inc. | 9.50% | — | — | — | — | |
| United Parcel Service Inc. | 373.66% | — | — | — | — | |
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 × 46,818 ÷ 35,469 = 132.00%
4 Click competitor name to see calculations.
A comprehensive evaluation of the financial data from December 31, 2017, to December 31, 2021, reveals a strong and consistent upward trajectory in value creation. While the capital base remained relatively stable, the market's valuation of the company grew significantly, resulting in a substantial expansion of the spread between market value and invested capital.
- Market Value Added (MVA)
- A continuous increase in MVA is observed throughout the five-year period. Starting at 18,354 million US$ in 2017, the value rose steadily to 46,818 million US$ by 2021. This represents a total growth of approximately 155%, indicating a significant increase in shareholder wealth and growing market confidence in the company's long-term prospects.
- Invested Capital
- The capital base exhibited minimal volatility and modest growth. Invested capital shifted from 33,382 million US$ in 2017 to 35,469 million US$ in 2021. The relative stability of this figure suggests that the growth in MVA was not driven by aggressive capital expansion, but rather by improved operational efficiency or a higher market valuation of existing assets.
- MVA Spread Ratio
- The MVA spread ratio demonstrates a sharp and consistent climb, rising from 54.98% in 2017 to 132.00% in 2021. The ratio surpassed the 100% threshold between 2019 and 2020, signifying that the market value added exceeded the total invested capital. This progression reflects a substantial improvement in the company's ability to generate value relative to the capital employed.
The confluence of stagnant invested capital and rapidly increasing MVA highlights an efficient scaling of value. The acceleration of the MVA spread ratio confirms that the company has successfully enhanced its value proposition to investors, consistently widening the gap between the cost of capital and the market's perceived value of the firm.
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MVA Margin
Norfolk Southern 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 | 46,818) | 43,532) | 34,949) | 24,524) | 18,354) | |
| Railway operating revenues | 11,142) | 9,789) | 11,296) | 11,458) | 10,551) | |
| Performance Ratio | ||||||
| MVA margin2 | 420.19% | 444.70% | 309.40% | 214.03% | 173.95% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| FedEx Corp. | 64.08% | — | — | — | — | |
| Uber Technologies Inc. | 305.35% | — | — | — | — | |
| Union Pacific Corp. | 599.66% | — | — | — | — | |
| United Airlines Holdings Inc. | 20.01% | — | — | — | — | |
| United Parcel Service Inc. | 170.51% | — | — | — | — | |
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 ÷ Railway operating revenues
= 100 × 46,818 ÷ 11,142 = 420.19%
3 Click competitor name to see calculations.
The analysis of financial metrics between 2017 and 2021 reveals a consistent upward trajectory in Market Value Added (MVA) despite fluctuations in operational revenue. A strong divergence is observed between the steady growth of MVA and the volatile nature of railway operating revenues, particularly during the 2020 fiscal period.
- Market Value Added (MVA) Growth
- A continuous increase in MVA was recorded over the five-year period, rising from 18,354 million USD in 2017 to 46,818 million USD in 2021. This represents a sustained expansion in the market's valuation of the company's capital relative to its invested capital.
- Railway Operating Revenues Performance
- Operating revenues demonstrated a non-linear pattern, increasing from 10,551 million USD in 2017 to a peak of 11,458 million USD in 2018. A notable contraction occurred in 2020, where revenues fell to 9,789 million USD, before recovering to 11,142 million USD by the end of 2021.
- MVA Margin Dynamics
- The MVA margin exhibited substantial expansion, climbing from 173.95% in 2017 to a peak of 444.70% in 2020. This peak was driven by the mathematical effect of rising MVA coinciding with the lowest revenue point in the observed period. A slight correction was observed in 2021, with the margin adjusting to 420.19% as operating revenues returned to growth.
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