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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- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Current Ratio since 2013
- Total Asset Turnover since 2013
- Price to Book Value (P/BV) since 2013
- Analysis of Revenues
- Analysis of Debt
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MVA
RH, MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).
1 Fair value of debt. See details »
2 Invested capital. See details »
- Market (fair) value of RH
- The market value shows an overall increasing trend from 2018 to 2021, starting at approximately $3.3 billion in early 2018, rising to a peak of about $14.2 billion in early 2021. This represents a significant increase over the four-year period. However, after this peak, there is a notable decline over the next two years, with the market value dropping to approximately $9.2 billion in early 2023.
- Invested capital
- Invested capital exhibits a steady upward trend from 2018 through 2022, increasing from roughly $1.2 billion in 2018 to a substantial $4.55 billion in early 2022. This indicates considerable capital investment growth during this period. In 2023, there is a slight decrease in invested capital to about $4.38 billion, marking a minor downturn after several years of growth.
- Market value added (MVA)
- Market value added consistently rises from 2018 to 2021, starting near $2.1 billion and surging to approximately $12.2 billion by early 2021. This reflects an increasing premium of market value over invested capital during these years. Following this peak, MVA declines sharply, falling to around $4.8 billion by early 2023, signifying a reduction in market value relative to invested capital.
- Summary of trends and insights
- The data illustrate strong growth in both market value and invested capital from 2018 until 2021, with market value expanding at a notably high rate relative to invested capital as evidenced by the sharply increasing MVA. The peak in early 2021 suggests optimal market conditions or favorable company performance up to that point. After 2021, the reductions in market value and MVA indicate a weakening market perception, despite a relatively stable invested capital base, which only slightly decreased in 2023. This divergence post-2021 may signal increased market risk, operational challenges, or shifts in investor sentiment impacting valuation more than the underlying capital invested.
MVA Spread Ratio
RH, MVA spread ratio calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| MVA spread ratio3 | |||||||
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| Lowe’s Cos. Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The Market Value Added exhibited a notable upward trend from 2018 through 2021, increasing from approximately 2.08 billion to 12.22 billion US dollars. This significant rise peaked in 2021, indicating a substantial increase in the market's valuation above the invested capital. However, from 2021 onwards, there was a marked decline, with MVA decreasing to about 6.17 billion in 2022 and further to 4.81 billion in 2023, suggesting a reduction in value creation relative to earlier years.
- Invested Capital
- Invested capital showed a consistent increase from 2018 to 2022, starting at around 1.23 billion US dollars and rising steadily to approximately 4.55 billion US dollars. This reflects a growth in the capital base over the years. In 2023, there was a slight decrease to roughly 4.38 billion US dollars, indicating a minor contraction or capital divestment after continual growth.
- MVA Spread Ratio
- The MVA spread ratio, representing the percentage return above the cost of invested capital, remained high and relatively stable around 170% in the early years (2018-2019), before dropping to 129% in 2020. A dramatic surge to over 600% occurred in 2021, correlating with the peak in MVA, reflecting exceptional value generation in that year. Subsequently, the ratio declined sharply to around 136% in 2022 and tapered further to approximately 110% in 2023, indicating a reduction in the efficiency or profitability of the invested capital compared to the peak period.
- Overall Analysis
- The data reflects a period of significant value creation until 2021, with both MVA and the MVA spread ratio reaching their highest points, driven by increasing invested capital. However, from 2021 to 2023, there is a clear pattern of declining MVA and spread ratio despite relatively high levels of invested capital, signaling potential challenges in maintaining market value growth and efficiency in capital utilization during the most recent years.
MVA Margin
RH, MVA margin calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | |||||||
| Net revenues | |||||||
| Performance Ratio | |||||||
| MVA margin2 | |||||||
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Amazon.com Inc. | |||||||
| Home Depot Inc. | |||||||
| Lowe’s Cos. Inc. | |||||||
| TJX Cos. Inc. | |||||||
Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The Market Value Added exhibited a general upward trend from 2018 to 2021, increasing from approximately 2.08 billion US dollars in early 2018 to a peak of about 12.22 billion US dollars by January 2021. However, subsequent years displayed a decline, with MVA reducing to approximately 6.17 billion in early 2022 and further to around 4.81 billion US dollars in 2023. This indicates significant growth until 2021, followed by a sharp contraction in market value added over the two succeeding years.
- Net Revenues
- Net revenues demonstrated a steady growth pattern from 2018 through 2022, rising from roughly 2.44 billion US dollars in 2018 to a high of nearly 3.76 billion in 2022. However, in 2023, there was a slight decline to about 3.59 billion US dollars. This suggests consistent revenue growth over the majority of the period with a mild reversal observed in the last year.
- MVA Margin
- The MVA margin, expressed as a percentage, remained relatively stable and within the 80-87% range from 2018 through 2020. In 2021, the margin experienced a substantial increase to over 429%, before declining markedly to 164% in 2022 and settling at 134% in 2023. Despite this decline from the peak, the margin in 2022 and 2023 remained significantly higher compared to the initial years. This fluctuation indicates a period of exceptional market value generation relative to net revenues in 2021, followed by a normalization phase in subsequent years.
- Overall Insights
- The data reveals that the company experienced strong growth in both market value added and net revenues through 2021, with a particularly notable surge in market value added and MVA margin that year. The subsequent downward trend in MVA alongside a slight decrease in net revenues after 2021 may point to challenges in maintaining the elevated market value levels. The disproportionate increase and subsequent decrease in MVA margin suggest that market perceptions and valuations were highly favorable in 2021 but moderated in the following years. The sustained revenue growth until 2022 indicates underlying business strength despite the market valuation adjustments.