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
United Rentals Inc., MVA calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
Between 2018 and 2022, a consistent upward trajectory is observed in the market valuation and the resulting market value added (MVA). The market fair value increased steadily from 21,160 million US dollars in 2018 to 38,876 million US dollars in 2022, representing a substantial growth in total market capitalization over the five-year period.
- Market Value Added (MVA) Trends
- MVA experienced significant growth, rising from 3,288 million US dollars in 2018 to 16,391 million US dollars in 2022. This indicates a strengthening market perception of the company's ability to create value beyond the cost of its invested capital.
- Invested Capital Analysis
- Invested capital exhibited relative stability from 2018 through 2020, with a slight contraction occurring in 2020 to 17,027 million US dollars. A period of expansion followed in 2021 and 2022, with invested capital reaching 22,485 million US dollars by the end of the analyzed timeframe.
- Value Creation Efficiency
- A notable divergence is observed between the growth of invested capital and the growth of market value. The most significant acceleration in value creation occurred between 2019 and 2020, where MVA increased by approximately 93% despite a simultaneous decrease in invested capital. This suggests a period of heightened operational efficiency or improved market sentiment regarding future earnings potential.
Overall, the data demonstrates that the market's valuation of the company grew at a rate far exceeding the increase in the capital employed, resulting in a five-fold increase in MVA over the five-year window.
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MVA Spread Ratio
United Rentals Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 16,391) | 14,085) | 10,946) | 5,684) | 3,288) | |
| Invested capital2 | 22,485) | 19,019) | 17,027) | 18,200) | 17,871) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 72.90% | 74.06% | 64.28% | 31.23% | 18.40% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Boeing Co. | 250.73% | 256.11% | — | — | — | |
| Caterpillar Inc. | 194.33% | 165.08% | — | — | — | |
| Eaton Corp. plc | 149.39% | 132.30% | — | — | — | |
| GE Aerospace | 84.87% | 110.77% | — | — | — | |
| Honeywell International Inc. | 224.23% | 209.78% | — | — | — | |
| Lockheed Martin Corp. | 399.68% | 319.28% | — | — | — | |
| RTX Corp. | 59.03% | 61.85% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 16,391 ÷ 22,485 = 72.90%
4 Click competitor name to see calculations.
The financial data reveals a consistent and substantial expansion in market value added (MVA) from 2018 through 2022, indicating that the market's valuation of the company has grown significantly relative to the capital invested in the business.
- Market Value Added (MVA)
- A strong upward trajectory is observed, with MVA increasing from 3,288 million USD in 2018 to 16,391 million USD by the end of 2022. The most pronounced growth occurred between 2019 and 2020, where the value nearly doubled from 5,684 million USD to 10,946 million USD.
- Invested Capital
- Invested capital remained relatively stable between 2018 and 2020, fluctuating between 17,027 million USD and 18,200 million USD. However, a notable increase began in 2021, reaching 22,485 million USD by 2022, suggesting an expansion of the capital base to support business operations.
- MVA Spread Ratio
- The MVA spread ratio experienced rapid growth, rising from 18.40% in 2018 to a peak of 74.06% in 2021. This sharp increase indicates that the market's perception of value creation significantly outpaced the growth of invested capital. A slight moderation occurred in 2022, with the ratio settling at 72.90%, representing a period of relative stabilization after years of aggressive expansion.
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MVA Margin
United Rentals Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 16,391) | 14,085) | 10,946) | 5,684) | 3,288) | |
| Revenues | 11,642) | 9,716) | 8,530) | 9,351) | 8,047) | |
| Add: Increase (decrease) in deferred revenue | 48) | 32) | (4) | (1) | 10) | |
| Adjusted revenues | 11,690) | 9,748) | 8,526) | 9,350) | 8,057) | |
| Performance Ratio | ||||||
| MVA margin2 | 140.22% | 144.49% | 128.38% | 60.80% | 40.81% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Boeing Co. | 191.47% | 203.39% | — | — | — | |
| Caterpillar Inc. | 188.24% | 190.31% | — | — | — | |
| Eaton Corp. plc | 221.57% | 198.58% | — | — | — | |
| GE Aerospace | 76.94% | 111.81% | — | — | — | |
| Honeywell International Inc. | 295.90% | 293.22% | — | — | — | |
| Lockheed Martin Corp. | 161.14% | 136.30% | — | — | — | |
| RTX Corp. | 96.78% | 107.41% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × 16,391 ÷ 11,690 = 140.22%
3 Click competitor name to see calculations.
The financial metrics demonstrate a consistent and substantial increase in market value creation over the five-year period from 2018 to 2022. The most prominent trend is the sustained growth of Market Value Added (MVA), which indicates a strong positive trajectory in the valuation of the entity relative to its invested capital.
- Market Value Added (MVA)
- A continuous upward trend is observed, with MVA rising from 3,288 million in 2018 to 16,391 million by 2022. The most significant growth spurt occurred between 2019 and 2020, where the value nearly doubled, suggesting a sharp increase in investor confidence or market premiums during that interval.
- Adjusted Revenues
- Revenue growth followed a generally positive trajectory, increasing from 8,057 million in 2018 to 11,690 million in 2022. A temporary contraction is noted in 2020, where revenues decreased to 8,526 million, before recovering and accelerating to peak levels in 2022.
- MVA Margin
- The MVA margin experienced rapid expansion, starting at 40.81% in 2018 and peaking at 144.49% in 2021. Notably, the margin surged during the 2020 revenue dip, jumping to 128.38%, which highlights a divergence between short-term operational revenue and long-term market valuation. A slight stabilization occurred in 2022, with the ratio adjusting to 140.22%.
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