AMD - Valens Credit Report - 2019 12 13
Credit markets are accurately stating CDS risk with a CDS of 57bps relative to an Intrinsic CDS of 47bps, while cash bond markets are grossly overstating credit risk with a YTW of 5.136%, relative to an Intrinsic YTW of 2.076%. Furthermore, Moody's is materially overstating the firm's fundamental credit risk, with their Ba2 credit rating seven notches lower than Valens IG3+ (A1) credit ratingAMD's compensation metrics should drive management to focus on improving all three value drivers: top-line growth, margins, and asset utilization, which would lead to Uniform ROA expansion and increased cash flows available to servicing debt obligations. Furthermore, most members of management hold material AMD equity relative to their annual compensation, aligning them with shareholders for long-term value creation
Earnings Call Forensicsâ„¢ of the firm's Q3 2019 earnings call (10/29) highlights that management generated excitement markers when discussing further product announcements in Q4 and the strong positioning of their product portfolio
AMD currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 28.3x Uniform P/E. However, even at these levels, the market is pricing in expectations for Uniform ROA to decline from 21% in 2018 to 16% through 2023, accompanied by 5% Uniform Asset growth going forward
Advanced Micro Devices is a semiconductor company. The company primarily provides x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit, chipsets, graphics processing units (GPUs), data center and personnel GPUs, and development services; server and embedded processors, semi-custom System-on-Chip products, development services and technology for game consoles. The company also licenses portions of its intellectual property portfolio. The company's segments are: Computing and Graphics, which consists of desktop, notebooks, commercial, and chipsets products; and Enterprise, Embedded and Semi-Custom, which includes server processors, and embedded P\processors products.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.