TEX - Valens Credit Report - 2024 02 26
Credit markets are slightly overstating TEX's credit risk with a YTW of 6.402% relative to an Intrinsic YTW of 5.682%, and a CDS of 182bps relative to an Intrinsic CDS of 138bps. Furthermore, Moody's is materially overstating TEX's fundamental credit risk with its highly speculative Ba3 credit rating five notches below Valens'IG4+ (Baa1) credit rating.
Incentives Dictate BehaviorTM analysis highlights positive signals for credit holders. TEX's metrics should generally drive management to focus on all three value drivers: margins expansion, asset efficiency, and revenue growth. Moreover, all members of management are material owners of TEX equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long- term value creation for the firm. Additionally, most management members have low change-in-control compensation relative to their average annual compensation, indicating they may not be incentivized to pursue a takeover or accept a buyout of the company, decreasing event risk for creditors.
Earnings Call ForensicsTM of the firm's Q4 2023 (2/9/2024) earnings call highlights that management is confident aerial work platform revenue increased 18%, that their EPS improved by 75%, and that they are pursuing M&A opportunities to strengthen their business.
Terex is a global manufacturer of aerial work platforms, materials processing machinery and cranes. The company has two segments: Aerial Work Platforms, which designs, manufactures, services and markets aerial work platform equipment, utility equipment, telehandlers and light towers, including portable material lifts, self-propelled articulating and telescopic booms, scissor lifts, and trailer-mounted light towers as well as, their related components and replacement parts; and Material Processing, which designs, manufactures and markets materials processing and other equipment, including crushers, washing systems, apron feeders, conveyors, and their related components and replacement parts.
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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
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- 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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