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
Raytheon Co., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
An analysis of the financial performance from 2015 to 2019 reveals a general upward trajectory in the creation of shareholder wealth, as evidenced by the expansion of Market Value Added (MVA). While the growth was not linear, the market value consistently remained substantially higher than the invested capital throughout the five-year period.
- Market Value Trends
- The market value exhibited significant volatility, rising from US$ 44,331 million in 2015 to a peak of US$ 68,048 million in 2017. A notable contraction occurred in 2018, where value dropped to US$ 57,684 million, before recovering to its highest point of US$ 70,263 million by the end of 2019.
- Invested Capital Growth
- Invested capital demonstrated a steady and incremental increase over the period. Starting at US$ 22,413 million in 2015, the capital base grew consistently each year, reaching US$ 26,688 million in 2019. This indicates a disciplined and gradual expansion of the assets employed in the business.
- Market Value Added (MVA) Performance
- MVA followed the fluctuations of the market value closely, as the invested capital remained relatively stable. The MVA increased from US$ 21,918 million in 2015 to US$ 44,500 million in 2017. Despite a sharp decline to US$ 31,603 million in 2018, the figure rebounded strongly to US$ 43,575 million in 2019. The overall increase in MVA suggests that the market's perception of the company's future growth and profitability significantly outweighed the cost of the capital invested.
The divergence between the steadily increasing invested capital and the volatile but generally ascending market value underscores a strong market premium. The capacity to recover from the 2018 dip indicates resilient investor confidence in the company's long-term value creation capabilities.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
MVA Spread Ratio
Raytheon Co., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 43,575) | 31,603) | 44,500) | 28,280) | 21,918) | |
| Invested capital2 | 26,688) | 26,081) | 23,548) | 23,509) | 22,413) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 163.27% | 121.17% | 188.97% | 120.29% | 97.79% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 43,575 ÷ 26,688 = 163.27%
4 Click competitor name to see calculations.
The financial performance between 2015 and 2019 is characterized by significant fluctuations in market value creation set against a backdrop of steady growth in the capital base. While value addition remained positive throughout the period, the volatility of the market's valuation relative to invested capital indicates varying levels of investor confidence and perceived future growth potential.
- Market Value Added (MVA)
- MVA demonstrated an overall upward trajectory, increasing from US$ 21,918 million in 2015 to US$ 43,575 million in 2019. A pronounced peak was reached in 2017 at US$ 44,500 million, which was followed by a notable contraction to US$ 31,603 million in 2018. This downward movement was reversed in 2019, as the value recovered to near-peak levels.
- Invested Capital
- Invested capital exhibited a pattern of consistent, incremental growth over the five-year span. Starting at US$ 22,413 million in 2015, the capital base expanded steadily to reach US$ 26,688 million by December 31, 2019. This stability in capital deployment contrasts with the higher volatility observed in the company's market valuation.
- MVA Spread Ratio
- The MVA spread ratio reflects the efficiency of value creation relative to the capital invested. The ratio climbed from 97.79% in 2015 to a maximum of 188.97% in 2017, indicating a period of exceptional market premium. A significant correction occurred in 2018, with the ratio falling to 121.17%, before recovering to 163.27% in 2019. The overall trend suggests that the company consistently generated market value well in excess of its invested capital, despite the cyclical volatility observed in 2018.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
MVA Margin
Raytheon Co., MVA margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 43,575) | 31,603) | 44,500) | 28,280) | 21,918) | |
| Net sales | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Performance Ratio | ||||||
| MVA margin2 | 149.35% | 116.80% | 175.55% | 117.50% | 94.28% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 43,575 ÷ 29,176 = 149.35%
3 Click competitor name to see calculations.
Between 2015 and 2019, the company exhibited a consistent increase in net sales alongside significant fluctuations in market value added (MVA) and its corresponding margin. While revenue growth remained linear, the market's valuation of value creation showed higher volatility, peaking in 2017 before experiencing a contraction and subsequent recovery in 2019.
- Net Sales Performance
- Net sales demonstrated a steady upward trajectory throughout the five-year period, increasing from 23,247 million US dollars in 2015 to 29,176 million US dollars by 2019. This indicates a consistent expansion of the company's top-line revenue without interruption.
- Market Value Added (MVA) Analysis
- MVA experienced substantial growth between 2015 and 2017, rising from 21,918 million US dollars to a peak of 44,500 million US dollars. A notable contraction occurred in 2018, where MVA decreased to 31,603 million US dollars, before recovering to 43,575 million US dollars in 2019. This pattern suggests that while the company's intrinsic scale grew, external market valuation fluctuated independently of sales growth.
- MVA Margin Volatility
- The MVA margin followed the volatility of the total MVA, expanding from 94.28% in 2015 to a peak of 175.55% in 2017. A sharp decline to 116.80% was observed in 2018, marking a significant reduction in the market premium attributed to each dollar of sales. However, the margin rebounded to 149.35% by the end of 2019, indicating a restoration of market confidence in the company's value creation capabilities relative to its revenue stream.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?