Report
Valens Research

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 highly
speculative 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.
Underlying
Titan International Inc.

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.

Provider
Valens Research
Valens Research

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.

Analysts
Valens Research

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