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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MVA
Nike Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data over the six-year period exhibits notable fluctuations in key valuation metrics. The market value of Nike experienced an overall rise from 2019 to 2021, reaching a peak in May 2021, followed by a pronounced decline over the subsequent three years. Conversely, invested capital demonstrated a steady increase throughout the entire period, although the growth rate moderated somewhat after 2021. Market value added, which represents the difference between market value and invested capital, mirrors the trend observed in market value, peaking in May 2021 before significantly decreasing by May 2024.
- Market Value Trend
- The market value grew from approximately $142.4 billion in May 2019 to a high of $262.8 billion in May 2021. After this peak, it decreased sharply to around $116.0 billion by May 2024, marking an overall contraction in company valuation from its peak by more than half.
- Invested Capital
- Invested capital rose consistently from about $14.2 billion in May 2019 to $22.1 billion in May 2024, showing commitment to expanding or maintaining asset base. Although the magnitude of increase is more moderate compared to earlier years, it indicates continued reinvestment in the business.
- Market Value Added (MVA)
- MVA, an indicator of value creation beyond invested capital, increased notably from roughly $128.2 billion in May 2019 to its peak of $241.7 billion in May 2021. Afterward, it declined sharply to approximately $93.9 billion in May 2024. This decrease reflects reduced market expectations and value creation capacity relative to invested capital in recent years.
MVA Spread Ratio
Nike Inc., MVA spread ratio calculation, comparison to benchmarks
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| MVA spread ratio3 | |||||||
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | |||||||
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 MVA. See details »
2 Invested capital. See details »
3 2024 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added experienced significant fluctuations over the analyzed period. Initially, there was an increase from approximately 128 billion US dollars in 2019 to around 242 billion in 2021, indicating a strong rise. However, following this peak, the MVA declined notably, reaching about 94 billion by 2024. This downward trend in the later years suggests a reduction in the excess market value created over the invested capital.
- Invested Capital
- The invested capital showed a steady upward trend throughout the period. Starting from 14.2 billion in 2019, it increased to roughly 22.1 billion by 2024. The growth was gradual but consistent, reflecting ongoing investments or reinvestments in the company’s assets.
- MVA Spread Ratio
- This ratio, which represents the relative performance of market value added against invested capital, exhibited considerable volatility. It began very high at approximately 904% in 2019, decreased to about 777% in 2020, surged to nearly 1,150% in 2021, then declined significantly in subsequent years to 424% by 2024. The sharp drop after 2021 indicates a weakening in the company’s ability to generate market value above the amount of invested capital.
MVA Margin
Nike Inc., MVA margin calculation, comparison to benchmarks
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | |||||||
| Revenues | |||||||
| Performance Ratio | |||||||
| MVA margin2 | |||||||
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| lululemon athletica inc. | |||||||
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 MVA. See details »
2 2024 Calculation
MVA margin = 100 × MVA ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data indicates several notable trends over the analyzed period from May 31, 2019, to May 31, 2024.
- Market Value Added (MVA)
- The MVA shows an overall fluctuating pattern. It increased from $128,237 million in 2019 to a peak of $241,743 million in 2021. However, after this peak, the MVA declined sharply to $161,662 million in 2022, and continued to decrease to $93,898 million by 2024. This indicates a significant loss in value generation relative to the invested capital in recent years, despite the earlier substantial growth.
- Revenues
- Revenues exhibit a generally upward trend. The value decreased slightly from $39,117 million in 2019 to $37,403 million in 2020 but grew consistently thereafter, reaching $51,362 million in 2024. This reflects steady revenue expansion, particularly strong growth starting from 2021 onward, suggesting successful sales or market expansion initiatives.
- MVA Margin
- The MVA margin, representing market value added as a percentage of revenues, mirrors the pattern observed in MVA. It rose from 327.83% in 2019 to a high of 542.78% in 2021, indicating improved efficiency or value creation relative to revenue. This was followed by a marked decline, dropping to 182.82% by 2024. The decrease in MVA margin may reflect diminishing market confidence, increased costs, or challenges in converting revenue growth into value.
In summary, while revenues have shown steady growth over the years, the market value added and MVA margin have peaked and then declined considerably, highlighting a discrepancy between sales performance and overall value creation. This suggests the company may be facing challenges in sustaining market valuation despite increasing top-line figures. Management should investigate underlying causes such as cost structures, competitive dynamics, or investment returns to address this divergence.