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.
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Walgreens Boots Alliance Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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MVA
Walgreens Boots Alliance Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
- Market (fair) value of Walgreens Boots Alliance
- The market value increased significantly from 2014 to 2015, rising from approximately 88.4 billion US dollars to 137.3 billion US dollars. Following this peak, the value exhibited a declining trend over the subsequent years, decreasing to about 94.5 billion US dollars by 2019. This indicates a peak in 2015 followed by a steady reduction in market valuation through 2019.
- Invested capital
- Invested capital showed growth from 55.0 billion US dollars in 2014 to a peak of 85.4 billion US dollars in 2016. Thereafter, it declined somewhat and stabilized around the mid-70 billion US dollars range between 2017 and 2019. This trend reflects an initial period of increasing investments followed by a phase of consolidation.
- Market value added (MVA)
- Market value added rose sharply from 33.4 billion US dollars in 2014 to a high of 56.5 billion US dollars in 2015. Subsequently, MVA declined each year, falling to 17.1 billion US dollars by 2019. This pattern suggests that while the company added significant value relative to invested capital in 2015, this value creation diminished substantially over the following years.
- Overall trends and insights
- The data illustrate a period of strong valuation and capital investment growth up to 2015-2016, followed by a reversal characterized by declining market valuation and reduced value creation through to 2019. Despite invested capital maintaining relative stability after 2016, both market value and MVA have consistently decreased, indicating potential challenges in generating returns on invested capital during the latter part of the analyzed period.
MVA Spread Ratio
Walgreens Boots Alliance Inc., MVA spread ratio calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| MVA spread ratio3 | |||||||
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added showed an initial significant increase from approximately 33,384 million USD in 2014 to 56,534 million USD in 2015. This peak was followed by a decline to 50,349 million USD in 2016, then a sharper decrease to 34,013 million USD in 2017. The downward trend continued moderately in 2018 and more markedly in 2019, reaching 17,056 million USD. Overall, the MVA trend from 2015 onward indicates a reduction in the market valuation premium relative to invested capital.
- Invested Capital
- Invested capital exhibited a notable increase between 2014 and 2016, rising from 55,001 million USD to 85,356 million USD. After 2016, the invested capital decreased slightly in 2017 to 76,485 million USD and showed relative stability through 2018 and 2019, hovering around the 76,000 to 77,000 million USD range. This pattern suggests an expansion phase followed by a plateauing or slight contraction of invested resources.
- MVA Spread Ratio
- The MVA spread ratio paralleled the changes in market value added, with an increase from 60.7% in 2014 to a peak of 70.03% in 2015. Following this peak, the ratio steadily declined each year to reach 22.03% in 2019. This declining ratio indicates a shrinking return or value premium generated on the invested capital over the period, highlighting diminished market confidence or lower profitability from the capital employed.
MVA Margin
Walgreens Boots Alliance Inc., MVA margin calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | |||||||
| Sales | |||||||
| Performance Ratio | |||||||
| MVA margin2 | |||||||
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA) Trend
- The Market Value Added experienced a significant increase from 33,384 million USD in 2014 to a peak of 56,534 million USD in 2015. Subsequently, it showed a declining trend over the following years, dropping to 50,349 million USD in 2016, then further decreasing to 34,013 million USD in 2017 and 32,555 million USD in 2018. By 2019, the MVA substantially declined to 17,056 million USD, indicating a notable reduction in the company's market value added.
- Sales Growth Pattern
- Sales consistently increased throughout the observed period. Starting at 76,392 million USD in 2014, sales rose steadily each year: 103,444 million USD (2015), 117,351 million USD (2016), 118,214 million USD (2017), 131,537 million USD (2018), and reaching 136,866 million USD in 2019. This reflects a continuous upward sales trajectory with moderate acceleration in the later years.
- MVA Margin Development
- The MVA margin showed a decreasing trend over the six-year span. It began at 43.7% in 2014, increased to 54.65% in 2015, signaling strong value addition relative to sales that year. However, after 2015, the margin declined successively: 42.9% in 2016, 28.77% in 2017, 24.75% in 2018, and sharply dropped to 12.46% in 2019. This decline suggests diminishing effectiveness in converting sales into market value added over time.
- Overall Insights
- While sales have shown consistent growth over the period, market value added and its margin have both exhibited notable declines after peaking in 2015. This divergence indicates that despite increasing revenue, the returns in terms of market value creation have weakened considerably. The sharp fall in MVA and MVA margin in later years could point to challenges in profitability, market perception, or operational efficiency impacting value generation relative to sales growth.