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
Stryker 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 »
An analysis of the financial data from 2017 to 2021 reveals a consistent and significant upward trajectory in value creation. The company demonstrated a sustained increase in market valuation that substantially outpaced the growth of its invested capital, leading to a marked expansion in market value added over the five-year period.
- Market Value Trends
- Market capitalization experienced steady growth, rising from US$ 62,945 million in 2017 to US$ 108,564 million by 2021. The most aggressive expansion occurred between 2017 and 2020, with the growth rate decelerating significantly in 2021, where the value remained relatively stable.
- Invested Capital Evolution
- Invested capital grew from US$ 17,502 million in 2017 to a peak of US$ 27,132 million in 2020. A slight contraction was observed in 2021, with capital decreasing to US$ 26,516 million, suggesting a period of capital optimization or reduced investment expenditure during the final year of the period.
- Market Value Added (MVA) Performance
- MVA grew robustly from US$ 45,443 million in 2017 to US$ 82,048 million in 2021. The substantial increase in MVA indicates that the market consistently valued the company far above the book value of the capital invested in its operations.
- Comparative Analysis of Value Creation
- The widening gap between market value and invested capital highlights an increasing premium placed on the company's intangible assets, growth prospects, and future earning potential. By 2021, the MVA was more than three times the amount of the invested capital, reflecting strong investor confidence in the efficiency of the company's capital deployment.
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MVA Spread Ratio
Stryker 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 | 82,048) | 80,785) | 70,559) | 56,571) | 45,443) | |
| Invested capital2 | 26,516) | 27,132) | 23,274) | 20,767) | 17,502) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 309.43% | 297.75% | 303.17% | 272.41% | 259.64% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | 266.78% | — | — | — | — | |
| Elevance Health Inc. | 116.25% | — | — | — | — | |
| Intuitive Surgical Inc. | 2,002.36% | — | — | — | — | |
| Medtronic PLC | 163.10% | — | — | — | — | |
| UnitedHealth Group Inc. | 265.59% | — | — | — | — | |
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 × 82,048 ÷ 26,516 = 309.43%
4 Click competitor name to see calculations.
Between 2017 and 2021, a consistent expansion in shareholder value creation is evident, characterized by substantial increases in both total market value added and the efficiency of capital utilization.
- Market Value Added (MVA)
- A strong and continuous upward trend is observed in MVA, which rose from US$ 45,443 million in 2017 to US$ 82,048 million by the end of 2021. This growth indicates a significant increase in the market's valuation of the company relative to the capital contributed by investors.
- Invested Capital
- Invested capital increased steadily from US$ 17,502 million in 2017 to a peak of US$ 27,132 million in 2020. A slight contraction followed in 2021, with the figure decreasing to US$ 26,516 million, suggesting a shift toward more efficient capital management or a reduction in the capital base during the final year of the period.
- MVA Spread Ratio
- The MVA spread ratio reflects a general upward trajectory, climbing from 259.64% in 2017 to 309.43% in 2021. While a marginal decline to 297.75% occurred in 2020, the ratio reached its peak in 2021. This trend confirms that the growth in market value has significantly outpaced the growth in invested capital, signaling enhanced value creation efficiency.
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MVA Margin
Stryker 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 | 82,048) | 80,785) | 70,559) | 56,571) | 45,443) | |
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Performance Ratio | ||||||
| MVA margin2 | 479.59% | 562.92% | 474.06% | 415.93% | 365.18% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Abbott Laboratories | 384.46% | — | — | — | — | |
| Elevance Health Inc. | 54.23% | — | — | — | — | |
| Intuitive Surgical Inc. | 1,575.51% | — | — | — | — | |
| Medtronic PLC | 391.27% | — | — | — | — | |
| UnitedHealth Group Inc. | 130.39% | — | — | — | — | |
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 ÷ Net sales
= 100 × 82,048 ÷ 17,108 = 479.59%
3 Click competitor name to see calculations.
Market value added and its relationship to sales revenue demonstrate a period of significant valuation expansion between 2017 and 2021. The overall trend indicates a strong increase in the market's valuation of the company relative to its invested capital, even during periods of revenue fluctuation.
- Market Value Added (MVA)
- A consistent upward trajectory is observed in the absolute market value added, which grew from US$ 45,443 million in 2017 to US$ 82,048 million by the end of 2021. The most substantial year-over-year increases occurred between 2018 and 2020, suggesting a period of accelerated wealth creation for shareholders.
- Net Sales Performance
- Net sales exhibited general growth, increasing from US$ 12,444 million in 2017 to US$ 17,108 million in 2021. A temporary contraction was noted in 2020, where sales declined to US$ 14,351 million from the previous year's US$ 14,884 million. However, a robust recovery followed in 2021, marking the highest sales volume in the analyzed period.
- MVA Margin Trends
- The MVA margin showed a steady increase from 365.18% in 2017, peaking at 562.92% in 2020. Notably, the margin reached its maximum value in 2020 despite the simultaneous decline in net sales, indicating that market valuation expanded independently of immediate revenue performance. In 2021, the margin moderated to 479.59%, as the increase in net sales outpaced the growth in total MVA.
In summary, the data reflects a strong expansion in market valuation that significantly outstripped sales growth for the majority of the period. While the MVA margin normalized in 2021, the company maintained a substantially higher valuation multiple relative to its sales than was present at the start of the five-year period.
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