SLB N.V. (NYSE:SLB)

The financial data reveals several key trends regarding the company's market valuation and capital investment over the five-year period ending December 31, 2024.

Market (fair) value of SLB

The market value shows a substantial increase from 47,784 million US dollars in 2020 to a peak of 90,682 million US dollars in 2022. Following this peak, there is a notable decline over the next two years, falling to 85,967 million in 2023 and further to 70,605 million in 2024. This indicates a volatility in market sentiment or valuation possibly influenced by external market conditions or company-specific factors affecting investor confidence.

Invested capital

The invested capital demonstrates a generally upward trend. Starting at 33,428 million US dollars in 2020, it slightly decreased in 2021 to 32,896 million but then rose steadily each year afterward, reaching 39,383 million in 2024. This suggests incremental investments in the company's assets, reflecting growth or expansion initiatives despite fluctuations in market value.

Market value added (MVA)

The market value added, representing the difference between market value and invested capital, shows strong growth initially, rising markedly from 14,356 million in 2020 to a peak of 56,751 million in 2022. Afterward, it declines to 48,191 million in 2023 and more sharply to 31,222 million in 2024. This decline in MVA aligns with the decrease in market value, indicating reduced value creation relative to the invested capital during the latter years of the period.

In summary, the company experienced significant growth in market valuation and value creation until 2022, followed by a downturn in the last two years analyzed. Invested capital showed a generally increasing pattern, suggesting continued commitment to asset development or acquisition. The divergence between rising invested capital and falling market values in the most recent years could indicate challenges in generating returns sufficient to maintain previous market confidence levels.

Market Value Added (MVA)

The market value added experienced significant growth from 14,356 million US dollars at the end of 2020 to a peak of 56,751 million US dollars at the end of 2022. Subsequently, MVA declined to 48,191 million US dollars in 2023 and further decreased to 31,222 million US dollars by the end of 2024. This indicates a strong positive market valuation trend in the initial years, followed by a notable decline in the latter period.

Invested Capital

Invested capital remained relatively stable with a slight downward movement from 33,428 million US dollars in 2020 to 32,896 million US dollars in 2021. From 2021 onwards, there was a steady increase, reaching 39,383 million US dollars by the end of 2024. This suggests a gradual increase in the capital invested in the business over the timeframe, with a slower start followed by a gradual upward trend.

MVA Spread Ratio

The MVA spread ratio started at 42.94% in 2020 and surged sharply to 167.25% in 2022, reflecting enhanced returns relative to invested capital during this period. However, the spread ratio decreased noticeably to 79.28% by 2024, matching the downward trend seen in MVA. This reflects a contraction in value creation margin despite the overall rise in invested capital.

Overall Analysis

The data reflect an initial phase of impressive value creation up to 2022, evidenced by the sharp rises in both MVA and the MVA spread ratio. The subsequent decline in these metrics from 2023 to 2024 suggests a reduced ability to generate market value above invested capital, despite a steady increase in invested capital levels. This pattern indicates potential challenges in maintaining market valuation momentum or profitability in the more recent period.

The financial data presents several key trends over the five-year period ending in 2024. There is a notable fluctuation in market value added (MVA), revenue, and MVA margin, each demonstrating different growth and contraction phases.

Market Value Added (MVA)

MVA shows significant volatility throughout the period. It increased sharply from 14,356 million US dollars in 2020 to a peak of 56,751 million US dollars in 2022. Following this peak, MVA declined considerably over the next two years, dropping to 31,222 million US dollars by the end of 2024. This pattern suggests periods of rapid value creation followed by a downward adjustment or value erosion in more recent years.

Revenue

Revenue displays a generally upward trajectory across the entire timeframe. Starting at 23,601 million US dollars in 2020, it experienced a slight decrease in 2021 to 22,929 million, but recovered strongly thereafter. Revenue growth accelerated in 2022 and continued through to 2024, reaching 36,289 million US dollars. This steady increase indicates expanding business operations or increased sales volume despite fluctuations in market value.

MVA Margin

The MVA margin, which represents the market value added as a percentage of revenue, shows considerable variation. It surged dramatically from 60.83% in 2020 to over 200% in 2022, reflecting a period when market value added increased much faster than revenue. However, after 2022, the margin declined significantly, falling to 86.04% by 2024. Although still positive, the reduction signals that the efficiency of converting revenue into market value has diminished relative to its peak years.

In summary, while the company’s revenue steadily increased over the five years, the market value added experienced a volatile cycle with a peak in 2022 followed by a notable decline. The MVA margin mirrored this trend, initially indicating high value creation efficiency but later reflecting a reduction in the relative value generated per unit of revenue. These patterns suggest a period of rapid growth and value creation, followed by a phase of value correction or external market influences impacting overall valuation.