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
ONEOK 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 »
An evaluation of Market Value Added (MVA) between 2018 and 2022 indicates that the company has consistently generated a market premium over its invested capital, although this premium has been subject to notable volatility.
- Market Value Fluctuations
- The market valuation exhibited an unstable trend, increasing from US$ 36.1 billion in 2018 to US$ 44.5 billion in 2019. A significant decrease was observed in 2020, with the value falling to US$ 36.7 billion, followed by a recovery to US$ 44.2 billion in 2021 and a moderate decline to US$ 42.1 billion in 2022.
- Invested Capital Growth
- A steady increase in invested capital is evident, rising from US$ 16.4 billion in 2018 to US$ 22.1 billion in 2022. This consistent growth suggests a sustained expansion of the company's capital base over the five-year period, with only a marginal fluctuation occurring between 2020 and 2021.
- Analysis of Market Value Added (MVA)
- MVA followed a volatile path, reaching a maximum of US$ 24.6 billion in 2019 and a minimum of US$ 15.1 billion in 2020. By the end of 2022, the MVA stood at US$ 20.0 billion. The divergence between the steady growth of invested capital and the fluctuating market value suggests that MVA movements were predominantly influenced by external market sentiment and equity pricing rather than internal capital adjustments.
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MVA Spread Ratio
ONEOK 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 | 20,009,113) | 22,780,678) | 15,100,537) | 24,600,991) | 19,693,999) | |
| Invested capital2 | 22,064,152) | 21,409,739) | 21,625,131) | 19,885,058) | 16,415,008) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 90.69% | 106.40% | 69.83% | 123.72% | 119.98% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 57.71% | 54.49% | — | — | — | |
| ConocoPhillips | 93.55% | 86.17% | — | — | — | |
| Exxon Mobil Corp. | 67.23% | 42.25% | — | — | — | |
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 × 20,009,113 ÷ 22,064,152 = 90.69%
4 Click competitor name to see calculations.
The analysis of value creation metrics between 2018 and 2022 reveals a period of volatility in market perception despite a steady increase in the capital base. While the company expanded its invested capital consistently through 2020, the market's valuation of the added value fluctuated significantly, resulting in a variable MVA spread ratio.
- Market Value Added (MVA)
- MVA demonstrated a non-linear trend, starting at US$ 19.7 billion in 2018 and peaking at US$ 24.6 billion in 2019. A substantial contraction occurred in 2020, with MVA dropping to US$ 15.1 billion. This was followed by a strong recovery to US$ 22.8 billion in 2021, before settling at US$ 20.0 billion by the end of 2022.
- Invested Capital
- Invested capital showed a consistent growth trajectory from 2018 to 2020, increasing from US$ 16.4 billion to US$ 21.6 billion. In the subsequent two years, the capital base remained relatively stable, with a minor fluctuation in 2021 and a final increase to US$ 22.1 billion in 2022.
- MVA Spread Ratio
- The MVA spread ratio mirrored the volatility of the MVA, reaching a high of 123.72% in 2019. A sharp decline was observed in 2020, where the ratio fell to 69.83%, the lowest point in the analyzed period. While the ratio rebounded to 106.40% in 2021, it experienced a further decline to 90.69% in 2022, indicating a compression in the market premium generated per unit of invested capital.
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MVA Margin
ONEOK 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 | 20,009,113) | 22,780,678) | 15,100,537) | 24,600,991) | 19,693,999) | |
| Revenues | 22,386,892) | 16,540,309) | 8,542,242) | 10,164,367) | 12,593,196) | |
| Performance Ratio | ||||||
| MVA margin2 | 89.38% | 137.73% | 176.77% | 242.03% | 156.39% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 51.99% | 67.80% | — | — | — | |
| ConocoPhillips | 90.01% | 143.57% | — | — | — | |
| Exxon Mobil Corp. | 50.09% | 41.64% | — | — | — | |
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 ÷ Revenues
= 100 × 20,009,113 ÷ 22,386,892 = 89.38%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2022 reveals a divergent relationship between market value added and revenue growth, resulting in a significant contraction of the MVA margin.
- Market Value Added (MVA)
- MVA exhibited volatility over the five-year period, peaking in 2019 at approximately 24.6 billion US dollars. A sharp decline occurred in 2020, with value dropping to 15.1 billion US dollars, followed by a recovery to 22.8 billion US dollars in 2021. By the end of 2022, the MVA stabilized at approximately 20 billion US dollars, representing a slight decrease from the 2021 levels but remaining above 2018 baselines.
- Revenue Trends
- Revenues followed a U-shaped trajectory. A period of contraction was observed between 2018 and 2020, with annual revenues falling from 12.6 billion US dollars to a low of 8.5 billion US dollars. This was followed by an aggressive expansion phase; revenues surged to 16.5 billion US dollars in 2021 and reached a peak of 22.4 billion US dollars by December 31, 2022, effectively doubling the revenue levels seen during the 2020 trough.
- MVA Margin Analysis
- The MVA margin experienced a consistent downward trend following a peak of 242.03% in 2019. Despite the recovery of MVA in 2021 and 2022, the margin fell to 137.73% and then to 89.38%, respectively. This decline is primarily attributed to the rapid acceleration of revenues outpacing the growth in market value added. The substantial increase in the revenue denominator since 2020 has compressed the margin, indicating that the market valuation of added value is not scaling proportionally with the increase in top-line revenue.
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