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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Warner Bros. Discovery Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2008
- Price to Book Value (P/BV) since 2008
- Price to Sales (P/S) since 2008
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MVA
Warner Bros. Discovery Inc., MVA calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data reveals distinct trends regarding the market value and the invested capital over the five-year span.
- Market (fair) value of Warner Bros. Discovery
- The market value exhibited an overall increasing trend from 25,192 million USD in 2017 to 48,382 million USD in 2020, indicating substantial growth and possibly reflecting favorable market conditions or company performance. However, in 2021, there was a notable decline to 33,799 million USD, suggesting a potential loss of market confidence, external market volatility, or specific adverse events impacting valuation.
- Invested capital
- Invested capital grew sharply from 21,151 million USD in 2017 to 31,259 million USD in 2018. From 2018 onward, the invested capital remained relatively stable around 30,000 million USD, fluctuating only slightly downward to 30,674 million USD in 2020 and 30,724 million USD in 2021. This stability suggests limited new investment or divestment activities during these later years.
- Market value added (MVA)
- MVA experienced variability, initially declining from 4,041 million USD in 2017 to 1,944 million USD in 2019, indicating a reduction in market value relative to invested capital. A significant increase occurred in 2020, with MVA rising sharply to 17,708 million USD, correlating with the peak in market value that year. However, this gain reversed in 2021, dropping substantially to 3,075 million USD, aligning with the decline in market value observed during the same year.
Overall, the data suggest that the company saw substantial market valuation growth peaking in 2020, accompanied by relatively stable invested capital after 2018. The sharp fluctuations in MVA mirror the changes in market valuation, highlighting periods of both heightened investor optimism and subsequent correction.
MVA Spread Ratio
Warner Bros. Discovery Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals notable fluctuations across the observed periods in market value added (MVA), invested capital, and the MVA spread ratio.
- Market Value Added (MVA)
- The MVA exhibits significant volatility over the years. It starts at 4,041 million USD in 2017, followed by a decline to 3,567 million USD in 2018 and further drops to 1,944 million USD in 2019. A substantial increase occurs in 2020, jumping to 17,708 million USD, before plummeting again to 3,075 million USD in 2021. This sharp spike in 2020 suggests an extraordinary event or market perception that temporarily enhanced the company's market value above invested capital.
- Invested Capital
- Invested capital shows an upward trend from 2017 through 2018, increasing from 21,151 million USD to 31,259 million USD. It then stabilizes slightly, with minor fluctuations around 30,000 million USD for the subsequent years—30,994 million USD in 2019, dipping marginally to 30,674 million USD in 2020, and slightly rising to 30,724 million USD in 2021. This indicates relative stability in capital investment after a significant increase early on.
- MVA Spread Ratio
- The MVA spread ratio mirrors the trend of MVA, starting at a healthy 19.11% in 2017, declining substantially to 11.41% in 2018 and further to 6.27% in 2019. In 2020, the ratio markedly rises to 57.73%, reflecting the exceptional increase in MVA that year. However, it declines steeply again in 2021 to 10.01%. This pattern indicates fluctuating efficiency or value generation relative to invested capital, with an exceptional peak in 2020.
Overall, the data suggest that while the company maintained relatively steady invested capital since 2018, the market's valuation of the company's added value showed volatility, especially highlighted by the extraordinary spike and subsequent drop in 2020. This may warrant further investigation into the circumstances surrounding 2020 to understand underlying factors influencing market valuation and capitalization efficiency during this period.
MVA Margin
Warner Bros. Discovery Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data from the analyzed periods reveals several important trends regarding the company's market valuation and revenue performance.
- Market Value Added (MVA)
- The MVA exhibited notable fluctuations over the five-year span. It started at US$4,041 million at the end of 2017, then decreased to US$3,567 million in 2018 and further declined significantly to US$1,944 million in 2019. A sharp increase occurred in 2020, reaching US$17,708 million, followed by a steep reduction in 2021 to US$3,075 million. This volatile pattern indicates considerable shifts in market perception of value, with an exceptional peak in 2020.
- Adjusted Revenues
- Adjusted revenues showed a general upward trend from 2017 to 2021, increasing from US$6,952 million to US$12,115 million. The growth was steady, except for a slight decline observed in 2020, where revenues decreased from US$11,372 million in 2019 to US$10,723 million. Revenues recovered in 2021, surpassing previous levels and reaching the highest value in the period analyzed.
- MVA Margin (%)
- The MVA margin percentage followed a declining trend from 58.13% in 2017 to 17.1% in 2019, indicating diminishing market value relative to revenues during that period. In 2020, there was an extraordinary increase to 165.14%, driven primarily by the exceptional rise in MVA. However, this was not sustained, as the margin fell again in 2021 to 25.38%, closer to earlier levels but still below the initial margins in 2017 and 2018.
In summary, the data shows steady revenue growth with a minor interruption in 2020, coupled with highly volatile market value added and MVA margins. The spike in market value and associated margin in 2020 suggests a unique or exceptional event influencing market valuation during that year. The subsequent reversion indicates that the heightened market value was not maintained. Overall, the company demonstrated resilience in revenue generation, despite significant fluctuations in perceived market value.