EVA | Economic Value Added
All companies aim to increase wealth
and drive shareholder value.
EVA is the metric that most closely tracks with TSR over the long-term.
How EVA compares to other financial metrics
- The only metric where more is always better
- Adjusted for the cost of capital
- Free of accounting distortions
- Comparable across industries and business models
- Always discounts to the NPV of free cash flows
Understand your stock price
Benchmark against peers
Model future outcomes
Make better decisions
Consistent and transparent measurement
Leading indicator, predictive of future stock prices
Applicable across industries
The Benefits of EVA Explained
EVA ENCOURAGES RESPONSIBLE MANAGEMENT
EVA MAKES BENCHMARKING EASY
EVA | IN PRACTICE
EVA helps companies understand what is driving their share price. It is the same across industries and the only management metric where more is always better.
No matter how good you are, no matter how good you think you are – you have inefficiency. You are making poor decisions today. You’ve got to minimize those and you’ve got to use metrics to do it. You are what you inspect, not what you expect.
President & CEO, Fortune 50 Company
HOW ICS CAN HELP
Free EVA Profile
All ISS covered companies are entitled to download their EVA profile for free.The profile can help companies understand their current rank within their index and EVA value.
- EVA, not EBITDA: A Better Measure of Investment Value
- The Link Between TSR and EVA
- How EVA Can Enhance DCF and P/E Analysis: A Case Study
- Using EVA in Pay-for-Performance Analysis
- The EVA Measurement Formula: A Primer on Economic Value Added (EVA)
- The Four Key EVA Performance Ratios
- Use EVA to Improve Your Board’s Financial IQ
- Insights into Value Creation: Using EVA to Measure Performance
EVA IN THE PRESS
- (New York Law Journal) EVA as a Performance Measure in Executive Incentive Plans
- (Forbes) How Will EVA Change Performance Metrics, If At All?
- (Fortune) Tesla’s Future Depends on Other People’s Money
- (Fortune) Kraft Heinz: The Big Numbers Behind a Big Stock Collapse
- (Fortune) CEO Pay May Face New, Hard-to-Manipulate Yardstick as ISS Embraces EVA
- (Ethical Boardroom) Capital Allocation: A Governance Perspective
- (Forbes) CEOs Who Focus On ROIC (Return On Invested Capital) Outperform
- (CFO.com) A Company That Gets Managers to Think Like Owners
- (Semler Brossy) Economic Value Added Makes a Comeback
- (Meridian) Economic Value Added – New Governance Considerations
- (Farient) The Return of EVA
- (Semler Brossy) As the Prominence of EVA Resurges, How Can Companies Benefit?