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
Visa Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial trajectory from 2017 to 2022 indicates a period of significant wealth creation, characterized by a substantial gap between the market's valuation of the entity and its invested capital. The overall trend reflects a strong expansion in shareholder value that peaked in 2020 before entering a phase of stabilization.
- Market Value Trends
- A consistent upward trajectory in market capitalization is observed from 2017 to 2020, with the value increasing from 268,929 million USD to a peak of 471,132 million USD. Following this peak, the valuation experienced a slight contraction in 2021 and remained nearly stagnant through 2022, closing at 451,088 million USD.
- Invested Capital Analysis
- Invested capital exhibited relative stability with moderate fluctuations. After a slight decrease in 2018 to 47,578 million USD, there was a notable increase starting in 2019, reaching 61,524 million USD by 2020. For the subsequent two years, the invested capital remained consistent, oscillating minimally around the 60,900 million USD mark.
- Market Value Added (MVA) Performance
- Market Value Added demonstrated a strong growth pattern, mirroring the trend of the fair market value. MVA rose from 217,848 million USD in 2017 to a maximum of 409,608 million USD in 2020. This represents a substantial increase in the value created for shareholders over and above the capital invested. Between 2021 and 2022, the MVA stabilized at approximately 390,000 million USD.
The relationship between invested capital and MVA suggests a highly efficient utilization of capital, as the market valuation significantly exceeds the actual capital employed. The convergence of market value and MVA trends indicates that the fluctuations in shareholder wealth creation are primarily driven by market sentiment and valuation multiples rather than changes in the underlying invested capital base.
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MVA Spread Ratio
Visa Inc., MVA spread ratio calculation, comparison to benchmarks
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | 390,107) | 390,359) | 409,608) | 354,670) | 276,874) | 217,848) | |
| Invested capital2 | 60,981) | 60,806) | 61,524) | 50,974) | 47,578) | 51,080) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 639.72% | 641.98% | 665.77% | 695.79% | 581.94% | 426.48% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Accenture PLC | 442.58% | 739.74% | — | — | — | — | |
| Adobe Inc. | 658.07% | 1,033.13% | 1,082.99% | — | — | — | |
| AppLovin Corp. | 60.64% | 260.37% | — | — | — | — | |
| Cadence Design Systems Inc. | 1,302.22% | 1,110.87% | — | — | — | — | |
| Datadog Inc. | 1,772.59% | 5,219.74% | — | — | — | — | |
| International Business Machines Corp. | 60.62% | 55.46% | — | — | — | — | |
| Intuit Inc. | 406.80% | 1,175.12% | — | — | — | — | |
| Microsoft Corp. | 956.02% | 1,383.21% | — | — | — | — | |
| Oracle Corp. | 224.95% | 260.27% | — | — | — | — | |
| Palantir Technologies Inc. | 488.89% | 829.78% | — | — | — | — | |
| Palo Alto Networks Inc. | 559.30% | 573.51% | — | — | — | — | |
| Salesforce Inc. | 150.31% | 270.75% | — | — | — | — | |
| ServiceNow Inc. | 1,276.86% | 1,798.18% | — | — | — | — | |
| Synopsys Inc. | 565.55% | 707.79% | 468.10% | — | — | — | |
| Workday Inc. | 655.74% | 908.31% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 390,107 ÷ 60,981 = 639.72%
4 Click competitor name to see calculations.
An analysis of value creation and capital efficiency between 2017 and 2022 reveals a period of substantial expansion followed by a phase of stabilization. The overall trajectory indicates strong shareholder value creation relative to the capital employed in the business.
- Market Value Added (MVA)
- MVA exhibited significant growth from 2017 to 2020, rising from 217,848 million US$ to a peak of 409,608 million US$. This trend reflects a substantial increase in the market's valuation of the organization beyond its invested capital. Following the 2020 peak, the MVA stabilized, concluding the period at 390,107 million US$ in 2022, which indicates a minor contraction but remains significantly higher than the 2017 baseline.
- Invested Capital
- The capital base remained relatively stable with a moderate overall increase. After a slight dip to 47,578 million US$ in 2018, invested capital grew to a peak of 61,524 million US$ in 2020. Between 2020 and 2022, this figure remained consistent, fluctuating narrowly around 61 billion US$, suggesting a disciplined approach to capital deployment.
- MVA Spread Ratio
- The MVA spread ratio experienced a sharp ascent from 426.48% in 2017 to a peak of 695.79% in 2019, signaling a period of rapid increase in value creation efficiency. From 2019 through 2022, a gradual decline is observed, with the ratio settling at 639.72%. Although the ratio trended downward after 2019, it remained consistently high, indicating that the market continued to value the company at a significant premium over its invested capital throughout the entire period.
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MVA Margin
Visa Inc., MVA margin calculation, comparison to benchmarks
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | 390,107) | 390,359) | 409,608) | 354,670) | 276,874) | 217,848) | |
| Net revenues | 29,310) | 24,105) | 21,846) | 22,977) | 20,609) | 18,358) | |
| Performance Ratio | |||||||
| MVA margin2 | 1,330.97% | 1,619.41% | 1,874.98% | 1,543.59% | 1,343.46% | 1,186.67% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Accenture PLC | 213.17% | 379.26% | — | — | — | — | |
| Adobe Inc. | 766.46% | 1,287.44% | 1,554.19% | — | — | — | |
| AppLovin Corp. | 113.54% | 521.30% | — | — | — | — | |
| Cadence Design Systems Inc. | 1,299.21% | 1,128.47% | — | — | — | — | |
| Datadog Inc. | 1,226.04% | 4,145.45% | — | — | — | — | |
| International Business Machines Corp. | 105.00% | 105.45% | — | — | — | — | |
| Intuit Inc. | 782.89% | 1,489.94% | — | — | — | — | |
| Microsoft Corp. | 916.17% | 1,148.11% | — | — | — | — | |
| Oracle Corp. | 412.88% | 514.72% | — | — | — | — | |
| Palantir Technologies Inc. | 820.15% | 1,366.76% | — | — | — | — | |
| Palo Alto Networks Inc. | 651.61% | 771.73% | — | — | — | — | |
| Salesforce Inc. | 417.33% | 620.94% | — | — | — | — | |
| ServiceNow Inc. | 1,026.11% | 1,555.49% | — | — | — | — | |
| Synopsys Inc. | 796.87% | 1,126.17% | 803.94% | — | — | — | |
| Workday Inc. | 888.92% | 1,185.07% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Net revenues
= 100 × 390,107 ÷ 29,310 = 1,330.97%
3 Click competitor name to see calculations.
The financial trajectory from 2017 to 2022 indicates a period of significant expansion in market valuation followed by a phase of stabilization. While both net revenues and market value added experienced overall growth, the relationship between these two metrics shifted notably after 2020.
- Market Value Added (MVA)
- A strong upward trend was observed between 2017 and 2020, with MVA increasing from 217,848 million US$ to a peak of 409,608 million US$. Following this peak, the value experienced a slight contraction and remained relatively stable, concluding the period at 390,107 million US$ in 2022.
- Net Revenues
- Net revenues demonstrated consistent growth, rising from 18,358 million US$ in 2017 to 29,310 million US$ in 2022. A minor decrease was noted in 2020, but this was followed by a robust recovery and continued expansion through 2022.
- MVA Margin
- The MVA margin exhibited a non-linear progression, starting at 1,186.67% in 2017 and ascending to a maximum of 1,874.98% in 2020. This peak suggests a period where the market valuation grew significantly faster than the underlying revenue. Subsequently, a downward trend is observed from 2021 onward, with the margin decreasing to 1,330.97% by 2022. This decline occurred concurrently with increasing net revenues, indicating that the growth in market value added did not keep pace with the expansion of the revenue base during the final two years of the analyzed period.
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