RYI - Embedded Expectations Analysis - 2019 03 22
Ryerson Holding Corporation (RYI:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Assets, with a 1.5x Uniform P/B, implying bullish expectations for the firm. However, management appears concerned about their ability to drive profitable market share growth, macro headwinds in the steel industry, and their ability to refinance at a lower interest rate.Specifically, management may lack confidence in their ability to focus on profitable market share growth, sustain CS&W cost savings, and expand margin in the
short-term. Also, they may be concerned about macro headwinds for the steel industry, as well as their ability to refinance at lower interest rates. Finally, they may be exaggerating the synergies and growth opportunities within Central, and may lack confidence in their ability to improve inventory efficiency.
Ryerson Holding is a metals service center, a processor and distributor of industrial metals. The company provides flat and long metals products. The company also provides processing and fabrication services such as bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials to a specified thickness, length, width, shape, and surface quality pursuant to specific customer orders. The company operates across North America and in China.
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.
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