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
Valero Energy Corp., MVA calculation
US$ in millions
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 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) from 2019 to 2023 reveals a general upward trajectory in shareholder value creation, characterized by a significant expansion of the premium over invested capital, despite a slight contraction in the final year.
- Market Value Trends
- The market value of the company exhibited consistent growth for four consecutive years, rising from US$ 42,755 million in 2019 to a peak of US$ 63,442 million in 2022. This represents a substantial increase in perceived market worth. However, a moderate decline was observed in 2023, with the value settling at US$ 61,180 million.
- Invested Capital Growth
- Invested capital demonstrated a steady and incremental increase throughout the five-year period. Starting at US$ 40,757 million in 2019, the capital base grew to US$ 51,119 million by December 31, 2023. This consistent rise indicates a continuous commitment of resources into the company's operational assets.
- Market Value Added (MVA) Dynamics
- The MVA grew significantly from US$ 1,998 million in 2019 to US$ 10,061 million in 2023. The most pronounced surge occurred between 2019 and 2020, where MVA increased by approximately 340%. Value creation peaked in 2022 at US$ 13,670 million, suggesting that during this period, the market's valuation of the company's future earning potential far exceeded the actual capital invested. The subsequent decrease to US$ 10,061 million in 2023 reflects a narrowing of the gap between market value and invested capital, though the MVA remains substantially higher than the 2019 baseline.
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MVA Spread Ratio
Valero Energy 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 millions) | ||||||
| Market value added (MVA)1 | 10,061) | 13,670) | 8,839) | 8,785) | 1,998) | |
| Invested capital2 | 51,119) | 49,772) | 44,526) | 40,966) | 40,757) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 19.68% | 27.46% | 19.85% | 21.44% | 4.90% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | 47.11% | 57.71% | 54.49% | — | — | |
| ConocoPhillips | 83.41% | 93.55% | 86.17% | — | — | |
| ExxonMobil Holdings 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 × 10,061 ÷ 51,119 = 19.68%
4 Click competitor name to see calculations.
The financial data from 2019 to 2023 indicates a period of significant expansion in market value creation relative to the capital invested in the business. A substantial shift in market perception is evident between 2019 and 2020, marking the beginning of a multi-year period of elevated value addition.
- Market Value Added (MVA)
- A strong upward trend in MVA is observed from 2019 through 2022, with values increasing from US$ 1,998 million to a peak of US$ 13,670 million. While 2023 experienced a contraction to US$ 10,061 million, the MVA remains substantially higher than the initial 2019 levels, suggesting a lasting increase in the market's valuation of the company's ability to generate wealth above its invested capital.
- Invested Capital
- Invested capital demonstrates a consistent and steady growth pattern over the five-year period. Starting at US$ 40,757 million in 2019, the capital base expanded annually to reach US$ 51,119 million by December 31, 2023. This indicates a continuous increase in the total resources deployed into the company's operations.
- MVA Spread Ratio
- The MVA spread ratio exhibits significant volatility and a general upward shift in baseline performance. The ratio rose sharply from 4.90% in 2019 to 21.44% in 2020, subsequently peaking at 27.46% in 2022. The decline to 19.68% in 2023 aligns with the reduction in absolute MVA, indicating that the growth in invested capital began to outpace the growth in market value during the final year of the period.
Overall, the analysis reveals that while the company consistently expanded its capital base, the market's valuation of that capital increased at a much more aggressive rate between 2020 and 2022. The 2023 figures represent a correction, yet the spread ratio remains significantly elevated compared to the pre-2020 period.
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MVA Margin
Valero Energy 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 millions) | ||||||
| Market value added (MVA)1 | 10,061) | 13,670) | 8,839) | 8,785) | 1,998) | |
| Revenues, includes excise taxes on sales by certain of foreign operations | 144,766) | 176,383) | 113,977) | 64,912) | 108,324) | |
| Performance Ratio | ||||||
| MVA margin2 | 6.95% | 7.75% | 7.75% | 13.53% | 1.84% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Chevron Corp. | 50.80% | 51.99% | 67.80% | — | — | |
| ConocoPhillips | 120.75% | 90.01% | 143.57% | — | — | |
| ExxonMobil Holdings 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 ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × 10,061 ÷ 144,766 = 6.95%
3 Click competitor name to see calculations.
The analysis of market value added (MVA) and MVA margin between 2019 and 2023 reveals a period of significant volatility and subsequent correction. While absolute market value added expanded considerably through 2022, the efficiency of this value creation relative to total revenue peaked earlier in the period.
- Market Value Added (MVA) Trends
- A consistent upward trajectory is observed from 2019 to 2022, with MVA increasing from US$ 1,998 million to a peak of US$ 13,670 million. This indicates a substantial increase in the market's valuation of the company's invested capital over this four-year span. A contraction followed in 2023, with the value receding to US$ 10,061 million, though this remains significantly above 2019 levels.
- Revenue Performance
- Revenues exhibited high variance during the analyzed period. A sharp decline occurred in 2020, with revenues falling to US$ 64,912 million. This was followed by a strong recovery in 2021 and a peak in 2022 at US$ 176,383 million. In 2023, revenues moderated to US$ 144,766 million.
- MVA Margin Analysis
- The MVA margin demonstrated a non-linear trend, peaking at 13.53% in 2020. This peak occurred during the year of lowest revenue, suggesting that market valuation remained resilient or grew even as top-line performance contracted. Subsequently, the margin experienced a downward correction, stabilizing at 7.75% in both 2021 and 2022, before further declining to 6.95% in 2023.
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