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
Texas Pacific Land Corp., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
2 Invested capital. See details »
An analysis of the valuation metrics from 2019 to 2023 reveals a significant expansion in market valuation and value creation relative to the capital invested in the entity. The period is characterized by substantial volatility in market capitalization, contrasted by a steady and consistent increase in invested capital.
- Market Value Trends
- The market value experienced significant fluctuations over the five-year period. After an initial increase from 5,263,670 thousand US$ in 2019 to 8,626,581 thousand US$ in 2020, a slight contraction occurred in 2021. A sharp appreciation followed, leading to a peak of 13,768,799 thousand US$ by December 31, 2022, before adjusting to 11,676,276 thousand US$ at the end of 2023.
- Invested Capital Growth
- Invested capital remained relatively stable in the early part of the period, with a marginal decrease between 2019 and 2020. However, starting in 2021, a consistent upward trajectory was established. Invested capital rose from 718,143 thousand US$ in 2021 to 1,117,290 thousand US$ in 2023, representing a nearly twofold increase from the 2020 levels.
- Market Value Added (MVA) Dynamics
- The Market Value Added exhibits a strong positive correlation with the overall market value, given that the invested capital constitutes a small fraction of the total market capitalization. MVA grew from 4,688,497 thousand US$ in 2019 to a peak of 12,928,093 thousand US$ in 2022. Although MVA declined to 10,558,986 thousand US$ in 2023, it remains substantially higher than the 2019 baseline.
- Value Creation Efficiency
- The disparity between the invested capital and the market value indicates an exceptionally high level of perceived value creation. The market's valuation of the entity far exceeds the actual capital deployed, suggesting that the organization's value is driven by intangible assets, strategic positioning, or high expectations of future cash flows rather than the physical scale of its invested capital base.
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MVA Spread Ratio
Texas Pacific Land Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 10,558,986) | 12,928,093) | 7,123,147) | 8,070,887) | 4,688,497) | |
| Invested capital2 | 1,117,290) | 840,706) | 718,143) | 555,694) | 575,173) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 945.05% | 1,537.77% | 991.88% | 1,452.40% | 815.15% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 47.11% | 57.71% | 54.49% | — | — | |
| ConocoPhillips | 83.41% | 93.55% | 86.17% | — | — | |
| Exxon Mobil Corp. | 51.74% | 67.23% | 42.25% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 10,558,986 ÷ 1,117,290 = 945.05%
4 Click competitor name to see calculations.
The financial data indicates a period of significant market value creation characterized by high volatility in market valuation and a steady increase in the capital base. Between 2019 and 2023, the overall market value added experienced an upward trajectory, starting at approximately 4.69 billion US dollars and ending at 10.56 billion US dollars, despite a peak in 2022. Simultaneously, invested capital demonstrated consistent growth, rising from 575.2 million US dollars in 2019 to 1.12 billion US dollars by the end of 2023.
- Market Value Added (MVA) Trends
- A non-linear growth pattern is observed in MVA. After an initial surge in 2020 and a slight correction in 2021, the value reached a five-year peak of 12.93 billion US dollars in 2022 before retreating to 10.56 billion US dollars in 2023. This suggests that while the market continues to assign a high premium to the company, this valuation is subject to periodic fluctuations.
- Invested Capital Growth
- Invested capital remained relatively stable between 2019 and 2020 but began a sustained ascent starting in 2021. The increase from 718.1 million US dollars in 2021 to 1.12 billion US dollars in 2023 reflects an expansion of the company's asset base or an increase in funding allocated to its operations.
- MVA Spread Ratio Analysis
- The MVA spread ratio remains exceptionally high throughout the period, indicating that the market value of the company far exceeds the capital invested in it. The ratio exhibited significant volatility, peaking at 1,537.77% in 2022. The decline to 945.05% in 2023 is a result of the dual impact of a decreasing MVA and an increasing amount of invested capital, which effectively compresses the spread.
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MVA Margin
Texas Pacific Land Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 10,558,986) | 12,928,093) | 7,123,147) | 8,070,887) | 4,688,497) | |
| Revenues | 631,595) | 667,422) | 450,958) | 302,554) | 490,496) | |
| Add: Increase (decrease) in unearned revenue | 5,140) | 1,938) | (1,910) | 8,787) | 4,012) | |
| Adjusted revenues | 636,735) | 669,360) | 449,048) | 311,341) | 494,508) | |
| Performance Ratio | ||||||
| MVA margin2 | 1,658.30% | 1,931.41% | 1,586.28% | 2,592.30% | 948.11% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 50.80% | 51.99% | 67.80% | — | — | |
| ConocoPhillips | 120.75% | 90.01% | 143.57% | — | — | |
| Exxon Mobil Corp. | 47.49% | 50.09% | 41.64% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × 10,558,986 ÷ 636,735 = 1,658.30%
3 Click competitor name to see calculations.
An analysis of the five-year financial trend from 2019 to 2023 reveals a substantial increase in market value added (MVA), characterized by significant volatility and a strong disconnect between revenue generation and market valuation.
- Market Value Added (MVA) Trends
- MVA exhibited a general upward trajectory over the period, growing from 4,688,497 thousand US dollars in 2019 to a peak of 12,928,093 thousand US dollars in 2022. Despite a moderate contraction to 10,558,986 thousand US dollars by the end of 2023, the overall value creation for shareholders remained significantly higher than 2019 levels.
- Adjusted Revenue Performance
- Adjusted revenues experienced a notable decline in 2020, dropping to 311,341 thousand US dollars from 494,508 thousand US dollars in 2019. This was followed by a recovery phase, reaching a five-year high of 669,360 thousand US dollars in 2022, before stabilizing at 636,735 thousand US dollars in 2023.
- MVA Margin Interpretation
- The MVA margin remained exceptionally high throughout the observed period, consistently exceeding 900%. The margin peaked in 2020 at 2,592.30%, occurring simultaneously with the lowest recorded adjusted revenues. This suggests that market valuation during this period was driven by factors other than immediate revenue performance. While the margin corrected to 1,586.28% in 2021 and fluctuated thereafter, it concluded the period at 1,658.30% in 2023, indicating that the market continues to price the entity at a massive premium relative to its annual adjusted revenues.
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