BRBR – Base Case iCDS 118bps, Negative Case iCDS 196bps, 2030 7.000% Bond YTW of 5.943%, iYTW of 5.165%, B1 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need
March 17, 2025
- Credit markets are overstating BRBR’s credit risk with a YTW of 5.943% relative to an Intrinsic YTW of 5.165% and an Intrinsic CDS of 118bps. Meanwhile, Moody’s is materially overstating the company’s fundamental credit risk, with its B1 credit rating five notches lower than Valens’ IG4 (Baa2) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. In addition, all members of management are material owners of BRBR equity relative to their annual compensation. This indicates they may be aligned with shareholders to pursue long-term value creation for the company.
- Earnings Call Forensics™ analysis of the firm’s Q1 2025 (2/4/2025) highlights that management is confident their Q1 topline results beat expectations and that they see opportunities to grow the brand and expand the ready to drink category. In addition, they are confident about their Dymatize ready to drink shake launch with fruity and cocoa pebble flavors, given their understanding that customers buy both pre-workout and ready to drink products. Lastly, they are confident consumers are still buying ready-to-drink even after using GLP-1s.
