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
Zoetis Inc., 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 financial data reveals a period of significant value creation, characterized by a Market Value Added (MVA) that consistently and substantially exceeds the invested capital. Between 2019 and 2023, the company maintained a strong positive MVA, indicating that the market's valuation of the firm's future growth and profitability significantly outweighs the total capital contributed by investors.
- Market Value Trajectory
- A growth trend was observed from 2019 to 2021, with the market value rising from US$ 75,522 million to a peak of US$ 100,973 million. This upward momentum was followed by a contraction in 2022, where value decreased to US$ 85,993 million, before experiencing a partial recovery to US$ 90,575 million by the end of 2023.
- Invested Capital Trends
- Invested capital exhibited a general increase over the first four years of the period, growing from US$ 9,838 million in 2019 to a peak of US$ 12,542 million in 2022. In 2023, there was a slight reduction in invested capital to US$ 11,550 million, suggesting a shift toward capital optimization or a reduction in asset intensity.
- Market Value Added (MVA) Dynamics
- The MVA mirrors the fluctuations of the market value, peaking in 2021 at US$ 89,361 million. The most significant volatility occurred between 2021 and 2022, where MVA dropped by approximately US$ 15,910 million. This decline occurred despite an increase in invested capital, indicating that the reduction in MVA was driven exclusively by a contraction in market sentiment rather than a loss of physical capital. By 2023, MVA rebounded to US$ 79,025 million, signaling a restoration of market confidence.
Overall, the persistent gap between market value and invested capital demonstrates a high capacity for value generation. The recovery observed in 2023 suggests a stabilizing trend following the volatility of 2022.
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MVA Spread Ratio
Zoetis Inc., 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 | 79,025) | 73,451) | 89,361) | 75,519) | 65,684) | |
| Invested capital2 | 11,550) | 12,542) | 11,612) | 11,557) | 9,838) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 684.20% | 585.64% | 769.56% | 653.45% | 667.66% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 438.96% | 297.39% | 253.64% | — | — | |
| Amgen Inc. | 213.63% | 308.27% | 303.88% | — | — | |
| Bristol-Myers Squibb Co. | 100.64% | 160.91% | 138.81% | — | — | |
| Danaher Corp. | 157.62% | 156.95% | 187.44% | — | — | |
| Eli Lilly & Co. | 2,391.43% | 1,240.67% | 834.21% | — | — | |
| Gilead Sciences Inc. | 148.05% | 175.26% | 119.58% | — | — | |
| Johnson & Johnson | 309.06% | 288.40% | 366.82% | — | — | |
| Merck & Co. Inc. | 412.35% | 312.72% | 223.02% | — | — | |
| Pfizer Inc. | 40.45% | 124.43% | 210.66% | — | — | |
| Regeneron Pharmaceuticals Inc. | 663.41% | 521.52% | 461.61% | — | — | |
| Thermo Fisher Scientific Inc. | 189.54% | 195.34% | 212.01% | — | — | |
| Vertex Pharmaceuticals Inc. | 712.26% | 484.09% | 564.91% | — | — | |
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 × 79,025 ÷ 11,550 = 684.20%
4 Click competitor name to see calculations.
An analysis of market value added (MVA) and capital efficiency from 2019 to 2023 reveals a period of growth followed by a correction and subsequent recovery. The overall trend indicates a strong ability to generate market value significantly exceeding the invested capital.
- Market Value Added (MVA)
- A consistent upward trend was observed from 2019 to 2021, with MVA rising from US$ 65,684 million to a peak of US$ 89,361 million. This growth was interrupted in 2022, when the value contracted to US$ 73,451 million, before recovering to US$ 79,025 million by the end of 2023.
- Invested Capital
- Invested capital increased steadily from US$ 9,838 million in 2019 to a peak of US$ 12,542 million in 2022. A reduction was noted in 2023, with invested capital decreasing to US$ 11,550 million, effectively returning to levels observed in 2020.
- MVA Spread Ratio
- The MVA spread ratio exhibited significant volatility, reflecting changes in market perception relative to capital investment. The ratio reached a five-year high of 769.56% in 2021, followed by a sharp decline to its lowest point of 585.64% in 2022. By 2023, the ratio rebounded to 684.20%, indicating a restoration of market confidence and value creation efficiency.
The correlation between the MVA and the MVA spread ratio suggests that the 2022 decline was driven primarily by a reduction in market value rather than a decrease in invested capital, which actually peaked during that same year. The 2023 recovery is characterized by a simultaneous increase in market value and a strategic reduction in invested capital, resulting in an improved spread ratio.
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MVA Margin
Zoetis Inc., 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 | 79,025) | 73,451) | 89,361) | 75,519) | 65,684) | |
| Revenue | 8,544) | 8,080) | 7,776) | 6,675) | 6,260) | |
| Performance Ratio | ||||||
| MVA margin2 | 924.92% | 909.05% | 1,149.19% | 1,131.37% | 1,049.26% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| AbbVie Inc. | 551.18% | 420.74% | 432.93% | — | — | |
| Amgen Inc. | 555.51% | 493.74% | 503.37% | — | — | |
| Bristol-Myers Squibb Co. | 151.08% | 250.01% | 240.26% | — | — | |
| Danaher Corp. | 517.54% | 389.99% | 468.46% | — | — | |
| Eli Lilly & Co. | 2,058.25% | 1,055.71% | 769.37% | — | — | |
| Gilead Sciences Inc. | 251.89% | 295.97% | 211.56% | — | — | |
| Johnson & Johnson | 359.73% | 345.74% | 383.60% | — | — | |
| Merck & Co. Inc. | 479.92% | 390.05% | 323.90% | — | — | |
| Pfizer Inc. | 105.20% | 136.21% | 224.83% | — | — | |
| Regeneron Pharmaceuticals Inc. | 605.08% | 525.04% | 312.14% | — | — | |
| Thermo Fisher Scientific Inc. | 378.46% | 360.17% | 431.35% | — | — | |
| Vertex Pharmaceuticals Inc. | 955.82% | 714.32% | 700.10% | — | — | |
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 ÷ Revenue
= 100 × 79,025 ÷ 8,544 = 924.92%
3 Click competitor name to see calculations.
The financial performance from 2019 to 2023 reveals a divergence between consistent operational growth and fluctuating market valuation. While top-line revenue experienced uninterrupted year-over-year growth, the market value added (MVA) and the corresponding MVA margin exhibited a peak-and-correction pattern, suggesting that market sentiment shifted despite strong fundamental expansion.
- Market Value Added (MVA) Trend
- A period of significant expansion in market value was observed between 2019 and 2021, with MVA rising from 65,684 million USD to a peak of 89,361 million USD. This upward trajectory was interrupted in 2022, when a contraction occurred, reducing the value to 73,451 million USD. A partial recovery followed in 2023, bringing the MVA to 79,025 million USD.
- Revenue Performance
- Revenue demonstrated steady and linear growth throughout the five-year period. Starting at 6,260 million USD in 2019, the figure climbed consistently each year to reach 8,544 million USD by December 31, 2023. This indicates a stable increase in the scale of operations and market penetration.
- MVA Margin Analysis
- The MVA margin, which relates the market value added to the total revenue, mirrored the volatility of the MVA. The margin increased from 1,049.26% in 2019 to a high of 1,149.19% in 2021. However, a notable decline was recorded in 2022, where the margin dropped to 909.05%, marking the first time in the period that the margin fell below the 1,000% threshold. By 2023, the margin showed a slight rebound to 924.92%.
The analysis indicates that while the company successfully grew its revenue base every year, the market's valuation of the value created relative to those revenues peaked in 2021. The subsequent decline in the MVA margin in 2022 and 2023 suggests that the growth in market valuation did not keep pace with the growth in revenue during the latter part of the period.
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