We're Talking Comps? Peer Comps?

Together with Cognitive Credit

Struggling to update all your models post-earnings?

With 3Q24 reporting behind us, credit teams are now scrambling to update their models and refresh their market views.

Technology can do that job faster – and that's exactly what we do at Cognitive Credit. Our proprietary machine-reading technology produces up-to-date, accurate and comprehensive models within minutes of earnings release. So you spend less time copy pasting numbers and more time analyzing credits.

All our models are:

• Sourced from official earnings reports

• Automatically extracted, structured and linked to source docs

• Algorithmically validated against accounting and temporal relationships 

• Verified by our expert team of analysts

As a special offer to High Yield Harry subscribers: For a limited time only, request a complimentary credit model for any issuer in our US and European High Yield coverage.

Time to Talk about Comps

Welcome back! Last week, I sent out a list of buyside shops in Denver Colorado to HYH Premium readers. On Wednesday, I’ll be wrapping up the year with my year end piece.

We’re going to talk about “comps” aka how to comparably analyze a situation based on similar datapoints. We can also call these “peer comps”, which focuses on evaluating the financial metrics, valuation metrics, and trading dynamics of similar companies. Here’s how I’m going to talk about comps:

1) Looking at this from an Enterprise Value (“EV”) lens, and the feasibility of a new transaction/an LBO.

2) Looking at this from a trading levels perspective (where should a loan or bond trade, aka “relative value”)

Let’s start with valuation, and why the leveraged finance market runs on EV/EBITDA.

Multiples are a function of the rate environment: As many of you know, 2021’s multiple may not be 2024’s multiple and part of that is due to projections of levered free cash flow and the interest burden on future cash generation. Everything in life is a DCF, in a way.