ZIP - Valens Credit Report - 2024 03 18
Credit markets are slightly overstating ZIP's credit risk with a YTW of 7.368% relative to an Intrinsic YTW of 6.737% and an Intrinsic CDS of 265bps. Furthermore, Moody's is materially overstating ZIP's fundamental credit risk with its B1 credit rating six notches below Valens' IG4+ (Baa1) credit rating.Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As a positive, most members of management are material owners of ZIP equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long-term value creation for the company. Additionally,
management has low change-in-control compensation relative to their annual compensation, indicating 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 earnings call (02/22/2023) highlights that management is confident online recruitment is taking share from offline recruitment and that their Phil AI tool interacts with job seekers more fluently than alternatives
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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