BA - Valens Credit Report - 2024 05 16
Cash bond markets are overstating BA's credit risk with a YTW of 6.004% relative to an Intrinsic YTW of 5.054%, while CDS markets are slightly overstating risk with a CDS of 120bps relative to an Intrinsic CDS of 59bps.Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. Management's compensation framework should drive them to focus on all three value drivers: margin expansion, asset efficiency, and top-line growth, which should lead to Uniform ROA expansion and increased cash flows available for servicing obligations. Additionally, management has no change-in-control compensation, indicating it is unlikely to be a target for a buyout or acquisition, reducing event risk for creditors.
Earnings Call Forensics™ of BA's Q1 2024 (04/24/2024) earnings call highlights that management is confident they have $17 billion of liquidity today, comprised of cash on hand and credit lines.
The Boeing is an aerospace firm. The company's segments include: Commercial Airplanes, which develops, produces and markets commercial jet aircraft and provides fleet support services, mainly to the commercial airline industry; Defense, Space and Security, which engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility, vertical lift, and commercial derivative aircraft; Global Services, which provides supply chain and logistics management, pilot and maintenance training systems and services, and data analytics and digital services; and Boeing Capital, which manages overall financing exposure.
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- 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
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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
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