AMD - Valens Credit Report - 2018 03 02
- CDS markets are overstating AMD's credit risk with a CDS of 188bps relative to an Intrinsic CDS of 91bps, while cash bond markets are materially overstating credit risk with a YTW of 5.736% relative to an Intrinsic YTW of 3.696%. Furthermore, Moody's is grossly overstating the firm's fundamental credit risk, with their B3 credit rating eleven notches lower than Valens IG3+ (A1) credit rating. - Incentives Dictate Behavior™ analysis highlights that AMD's management compensation framework is favorable for credit holders, as it aligns management to expand margins and grow the overall business in an asset efficient manner, which should lead to higher Uniform ROA levels and increased cash flows available for servicing obligations. Additionally, management members are material holders of AMD equity relative to their average annual compensation, indicating they should be well aligned with shareholders for long-term value creation - AMD's UAFRS-based P/B of 2.5x is high relative to historical valuations, indicating that equity markets are more bullish than credit markets, limiting the potential for fundamental-based equity upside. Additionally, should the company disappoint relative to aggressive market expectations, there could be room for equity downside
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.