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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Norfolk Southern Corp. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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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 »
The financial data reveals a consistent upward trend across all key metrics over the five-year period.
- Market (fair) value
- The market value of the company increased steadily from US$51,736 million at the end of 2017 to US$82,287 million by the end of 2021. This represents a growth of approximately 59% over the period, indicating strong market confidence and valuation appreciation.
- Invested capital
- Invested capital rose gradually from US$33,382 million in 2017 to US$35,469 million in 2021. The growth here is relatively modest compared to the increase in market value, suggesting that the company did not significantly increase its capital base despite growing market valuation.
- Market Value Added (MVA)
- Market value added, the difference between market value and invested capital, experienced substantial growth, increasing from US$18,354 million in 2017 to US$46,818 million in 2021. This sustained increase demonstrates enhanced shareholder value and the company's ability to generate market value well above its invested capital.
Overall, the data indicates that the company has been successful in creating significant value over invested capital, reflected by rising market valuation and increasing market value added. The moderate increase in invested capital suggests efficient use of resources without heavy capital expansion, while the strong rise in market value and MVA highlights positive market perception and potential robust financial performance.
MVA Spread Ratio
Norfolk Southern Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The analysis of the provided financial data reveals a consistent positive trend in the company's market value added (MVA) over the five-year period from 2017 to 2021. The MVA increased significantly from 18,354 million USD in 2017 to 46,818 million USD in 2021, indicating a growing value creation that exceeds the invested capital.
The invested capital showed a slight upward trend, rising gradually from 33,382 million USD in 2017 to 35,469 million USD in 2021. This indicates a relatively stable investment base with moderate growth over the years.
The MVA spread ratio, which measures the value added relative to invested capital, improved markedly during the same period. The ratio increased from 54.98% in 2017 to 132% in 2021, reflecting that the company has been enhancing its efficiency in generating value above the invested capital. This steady increase suggests sound management performance and effective utilization of capital.
- Market Value Added (MVA)
- Experienced substantial growth, increasing by approximately 155% over the five years.
- Invested Capital
- Displayed modest growth, with an increase of about 6% from 2017 to 2021, indicating stable capital investments.
- MVA Spread Ratio
- More than doubled during the period, signaling increased returns relative to the invested capital and improved corporate value creation.
Overall, the data illustrates a commendable performance with a robust increase in market value added and growing capital efficiency. The limited growth in invested capital alongside a significant rise in MVA and MVA spread ratio suggests enhanced operational effectiveness and value generation capability.
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 | ||||||
| Railway operating revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2021.
- Market Value Added (MVA)
- The MVA demonstrates a consistent upward trajectory throughout the observed period. Starting at 18,354 million US dollars in 2017, it increased significantly each year, reaching 46,818 million US dollars by the end of 2021. This growth reflects an increasingly positive market perception and value creation, more than doubling over the five years.
- Railway Operating Revenues
- The railway operating revenues showed a generally stable pattern with minor fluctuations. Revenues rose modestly from 10,551 million US dollars in 2017 to a peak of 11,458 million in 2018 but then experienced a slight decline in 2019 and a more pronounced drop in 2020 to 9,789 million US dollars. By 2021, revenues recovered somewhat to 11,142 million, approaching prior peak levels but not showing strong growth overall.
- MVA Margin
- The MVA margin, which indicates market value added relative to revenue, exhibited a sharp increase over the timeframe. It rose from 173.95% in 2017 to 420.19% in 2021, peaking at 444.7% in 2020. This suggests that despite flat or slightly declining operational revenues in some years, market value creation per unit of revenue improved substantially. The peak in 2020 despite revenue decline implies enhanced market confidence or other value drivers beyond revenue growth.
In summary, the company showed strong market value growth and improved value efficiency relative to revenue, despite some variability and a dip in operating revenues in 2020 likely due to external factors impacting the railway business. The recovery in revenues in 2021 alongside continued high MVA margin indicates a resilient performance in terms of market valuation.