TWI - Valens Credit Report - 2024 03 28
Credit markets are materially overstating TWI's credit risk with a YTW of 7.338% relative to an Intrinsic YTW of 5.198% and an Intrinsic CDS of 99bps. Furthermore, Moody's is materially overstating TWI's fundamental credit risk with its highlyspeculative B1 credit rating five notches below Valens' IG4 (Baa2) credit rating.
Incentives Dictate Behavior™ analysis highlights positive signals for creditors. TWI's metrics should generally drive management to focus on margins and turns, which could lead to Uniform ROA expansion. In addition, all members of management are material owners of TWI equity relative to their annual compensation. This indicates they may be aligned with shareholders to pursue long-term value creation for the company. Furthermore, management has low change-in-control compensation relative to their annual compensation. This indicates they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
Earnings Call Forensics™ of the firm's Q4 2023 (2/29/2024) earnings call highlights that management is confident Carlstar also tends to have a bigger first half of the year like the legacy Titan business and that it has some, but limited customer overlap.
Titan International is a wheel, tire, and undercarriage industrial manufacturer and supplier servicing customers across the globe. The company has three segments: agricultural, which provides agricultural rims, wheels, tires, and undercarriage systems and components are manufactured for use on various agricultural equipment, including tractors, combines, skidders, plows, and planters; earthmoving/construction, which manufactures rims, wheels, tires, and undercarriage systems and components for various types of off-the-road earthmoving, mining, military, construction and forestry equipment; and consumer, which manufactures bias truck tires in Latin America and light truck tires in Russia.
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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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