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 States Steel Corp., 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 »
The financial trajectory from 2018 to 2022 is characterized by significant volatility in market valuation relative to the growth of invested capital, resulting in inconsistent Market Value Added (MVA) performance.
- Market Valuation Trends
- The market value exhibited an initial decline in 2019 before experiencing a substantial increase starting in 2020. Between 2019 and 2022, the valuation rose from 5,375 million to 11,147 million, indicating a strong recovery and subsequent stabilization at a higher valuation plateau.
- Invested Capital Expansion
- Invested capital demonstrated a consistent upward trend throughout the five-year period. The capital base grew from 6,762 million in 2018 to 12,723 million by 2022. A particularly sharp increase occurred between 2020 and 2021, where invested capital rose by approximately 3,724 million.
- Market Value Added (MVA) Analysis
- The MVA remained negative for four of the five years analyzed, indicating that the market value of the firm was generally lower than the capital invested. The most severe contraction occurred in 2019 with an MVA of -2,466 million. A temporary reversal was observed in 2020, when MVA reached a positive 1,428 million, coinciding with a surge in market value that exceeded the capital base. However, the subsequent growth in invested capital outpaced market value gains in 2021 and 2022, returning the MVA to negative figures of -1,312 million and -1,576 million, respectively.
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MVA Spread Ratio
United States Steel Corp., 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 | (1,576) | (1,312) | 1,428) | (2,466) | (338) | |
| Invested capital2 | 12,723) | 12,346) | 8,622) | 7,841) | 6,762) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | -12.38% | -10.63% | 16.56% | -31.45% | -4.99% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Freeport-McMoRan Inc. | 122.69% | 138.11% | — | — | — | |
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 × -1,576 ÷ 12,723 = -12.38%
4 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 reflects significant volatility in market-perceived value relative to the capital invested in the organization. While capital investment grew steadily throughout the period, the resulting market value added remained predominantly negative, indicating that the market valuation often lagged behind the total invested capital.
- Market Value Added (MVA)
- The MVA exhibited substantial fluctuations, beginning at -338 million USD in 2018 and dropping to a low of -2,466 million USD in 2019. A notable recovery occurred in 2020, where MVA transitioned to a positive 1,428 million USD. However, this trend reversed in subsequent years, falling to -1,312 million USD in 2021 and -1,576 million USD in 2022, suggesting a period of instability in shareholder value creation.
- Invested Capital
- A consistent upward trend in invested capital was observed over the five-year period. Starting at 6,762 million USD in 2018, the capital base expanded annually, reaching 12,723 million USD by the end of 2022. This represents a significant increase in the total resources deployed into the business, with a particularly sharp rise occurring between 2020 and 2021.
- MVA Spread Ratio
- The MVA spread ratio mirrored the volatility of the absolute MVA, reflecting the efficiency of value creation relative to the capital base. The ratio reached a nadir of -31.45% in 2019 before peaking at 16.56% in 2020. In the final two years of the period, the ratio remained negative, closing at -12.38% in 2022. The divergence between the growing invested capital and the predominantly negative spread ratio indicates that the increase in capital deployment did not consistently translate into proportional increases in market value.
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MVA Margin
United States Steel Corp., 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 | (1,576) | (1,312) | 1,428) | (2,466) | (338) | |
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Performance Ratio | ||||||
| MVA margin2 | -7.48% | -6.47% | 14.66% | -19.06% | -2.38% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Freeport-McMoRan Inc. | 195.06% | 210.68% | — | — | — | |
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 ÷ Net sales
= 100 × -1,576 ÷ 21,065 = -7.48%
3 Click competitor name to see calculations.
The financial performance regarding market value added (MVA) and the associated MVA margin exhibits significant volatility between 2018 and 2022. While net sales showed a substantial recovery and growth trajectory in the latter half of the period, the MVA remained predominantly negative, suggesting that the market capitalization frequently fell below the total capital invested in the company.
- Market Value Added (MVA) Trends
- A volatile trend is observed in the absolute MVA, which began at -338 million USD in 2018 and deteriorated sharply to -2,466 million USD by 2019. A notable reversal occurred in 2020, where MVA shifted to a positive 1,428 million USD. However, this gain was temporary, as the value returned to negative territory in 2021 (-1,312 million USD) and further declined to -1,576 million USD by the end of 2022.
- Net Sales and MVA Divergence
- An inverse relationship is evident between revenue growth and market value addition from 2020 to 2022. Net sales reached a period low of 9,741 million USD in 2020—the same year MVA peaked—and subsequently surged to 21,065 million USD by 2022. Despite this doubling of sales, the MVA declined from its 2020 peak to a negative 1,576 million USD, indicating that increased top-line growth did not translate into increased market value relative to invested capital.
- MVA Margin Analysis
- The MVA margin mirrored the volatility of the absolute MVA, fluctuating between a low of -19.06% in 2019 and a peak of 14.66% in 2020. The margin returned to negative figures in 2021 (-6.47%) and 2022 (-7.48%). The contraction of the MVA margin during a period of expanding net sales suggests that the market's valuation of the company's future cash flows did not keep pace with the scale of its operations or the capital employed.
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