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Western Alliance (WAL)
NYSE:WAL
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Western Alliance
(NYSE:WAL)60Neutral
Positive Factors
Financial Performance
The stock is viewed as offering a compelling risk/reward profile, with expected superior EPS growth and profitability compared to peers.
Market Position
Western Alliance's shares are expected to trade at a slight premium to midcap bank peers due to better-than-expected earnings growth.
Negative Factors
Deposit Growth
$2 billion in expected deposit outflows in the fourth quarter are likely to keep shares range-bound in the near term.
Western Alliance (WAL) vs. S&P 500 (SPY)
Market Cap
$8.97B
Dividend Yield1.91%
Average Volume (3M)1.21M
Price to Earnings (P/E)11.5
Beta (1Y)2.14
Revenue Growth13.60%
EPS Growth8.85%
CountryUS
Employees3,260
SectorFinancial
Sector Strength93
IndustryBanking
Share Statistics
EPS (TTM)7.09
Shares Outstanding110,454,290
10 Day Avg. Volume1,254,350
30 Day Avg. Volume1,206,285
Financial Highlights & Ratios
PEG Ratio1.29
Price to Book (P/B)N/A
Price to Sales (P/S)2.97
Price to Cash Flow (P/CF)-3.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$108.10Price Target Upside39.83% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Western Alliance Business Overview & Revenue Model
Company DescriptionWestern Alliance Bancorporation (WAL) is a regional bank holding company headquartered in Phoenix, Arizona. The company operates through its primary subsidiary, Western Alliance Bank, providing a wide range of banking and financial services. It serves diverse sectors including commercial real estate, mortgage banking, and small and medium-sized businesses, with a strong focus on personalized service and tailored solutions. The bank offers products such as commercial and industrial loans, real estate loans, and treasury management services, catering to a broad clientele across the United States.
How the Company Makes MoneyWestern Alliance makes money primarily through interest income from its lending activities, which include commercial loans, real estate loans, and consumer loans. The company earns revenue from the interest rate spread between the interest it pays on deposits and the interest it earns on loans. In addition to interest income, Western Alliance generates revenue from non-interest income sources such as fees for treasury management services, deposit account services, and other banking services. The bank also benefits from strategic partnerships and a network of branches that enhance its outreach and customer service capabilities, contributing to its overall revenue growth.
Western Alliance Financial Statement Overview
Summary
Western Alliance demonstrates financial resilience with a strong balance sheet and improving cash flows. However, the income statement raises red flags with missing revenue data for 2024, creating uncertainty about the company's revenue-generating ability. Despite these issues, the balance sheet and cash flow improvements provide a stable financial foundation.Income Statement
The income statement shows volatility in revenue and profit margins. The company experienced a drop in total revenue in the latest year, with total revenue at zero for 2024, which is unusual and suggests data inconsistency or reporting issues. The net income for 2024 is higher than in previous years, indicating some level of profitability. However, the absence of revenue figures raises concerns about sustainability.45
Neutral
Balance Sheet
The balance sheet displays a solid equity base with stockholders' equity rising to $6.7 billion in 2024 from $6.1 billion in 2023. The debt-to-equity ratio improved significantly, with total debt dropping to zero, indicating strong balance sheet management. The equity ratio increased, reflecting a stable capital structure. Overall, the balance sheet indicates financial stability with reduced leverage.70
Positive
Cash Flow
Cash flow analysis reveals improvements but also inconsistencies. The operating cash flow turned positive in 2024 after a negative outflow in 2023, showing better cash generation. Free cash flow also improved significantly, swinging from negative to positive. However, the volatility in cash flows over recent years suggests some operational challenges.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.16B | 2.13B | 2.30B | 1.84B | 1.20B | Gross Profit |
| 3.16B | 2.56B | 2.30B | 1.84B | 1.20B | EBIT |
| -3.03B | 865.20M | 1.81B | 1.12B | 622.50M | EBITDA |
| 0.00 | 1.02B | 1.39B | 1.17B | 657.10M | Net Income Common Stockholders |
| 787.70M | 722.40M | 1.06B | 899.20M | 506.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 13.79B | 1.58B | 8.13B | 6.71B | 7.38B | Total Assets |
| 80.93B | 70.86B | 67.73B | 55.98B | 36.46B | Total Debt |
| 6.62B | 8.12B | 7.38B | 2.52B | 633.60M | Net Debt |
| 2.52B | 6.55B | 6.33B | 2.01B | -2.04B | Total Liabilities |
| 74.23B | 64.78B | 62.38B | 51.02B | 33.05B | Stockholders Equity |
| 6.71B | 6.08B | 5.36B | 4.96B | 3.41B |
| Cash Flow | Free Cash Flow | |||
| 235.90M | -442.90M | 2.10B | -2.72B | 643.40M | Operating Cash Flow |
| 235.90M | -328.60M | 2.25B | -2.65B | 670.20M | Investing Cash Flow |
| -19.00M | -2.16B | -13.13B | -14.71B | -7.54B | Financing Cash Flow |
| -176.70M | 3.02B | 11.41B | 15.21B | 9.10B |
Western Alliance Technical Analysis
Negative
77.31
Price Trends
86.05
Negative
87.26
Negative
79.74
Negative
Market Momentum
-2.10
Positive
31.83
Neutral
15.51
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WAL, the sentiment is Negative. The current price of 77.31 is below the 20-day moving average (MA) of 86.09, below the 50-day MA of 86.05, and below the 200-day MA of 79.74, indicating a bearish trend. The MACD of -2.10 indicates Positive momentum. The RSI at 31.83 is Neutral, neither overbought nor oversold. The STOCH value of 15.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WAL.
Western Alliance Risk Analysis
Western Alliance disclosed 41 risk factors in its most recent earnings report. Western Alliance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Western Alliance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $20.00B | 11.43 | 10.72% | 4.46% | 2.70% | -8.16% | |
69 Neutral | $7.58B | 10.36 | 13.15% | 3.28% | 7.91% | 13.79% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
63 Neutral | $7.80B | 11.86 | 10.72% | 4.78% | -6.54% | -21.90% | |
61 Neutral | $10.35B | 14.63 | 8.70% | 3.12% | 4.56% | -13.90% | |
60 Neutral | $8.97B | 11.45 | 12.32% | 1.91% | 13.60% | 8.85% |
* Financial Sector Average
Performance Comparison
WAL
Western Alliance
77.31
18.14
30.66%
CMA
Comerica
58.30
8.28
16.55%
FHN
First Horizon
18.88
4.46
30.93%
RF
Regions Financial
22.07
3.21
17.02%
ZION
Zions Bancorporation National Association
50.15
9.29
22.74%
Western Alliance Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: -17.40% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Positive
Western Alliance demonstrated strong earnings performance and deposit growth, with significant improvements in asset quality and efficiency targets. However, challenges such as a decline in net interest income and increased criticized assets were noted. Overall, the highlights indicate a positive outlook despite some financial and operational challenges.Highlights
Strong Earnings Performance
Western Alliance generated $1.95 per share for the fourth quarter and $7.09 for 2024. Pre-provision net revenue growth was 12% linked-quarter unannualized.
Robust Deposit Growth
Deposits grew $11 billion in 2024, with a 20% year-over-year increase, demonstrating strong franchise strength.
Improved Asset Quality
A material decline in special mention loans was noted, with net charge-offs expected to remain stable in 2025 compared to 2024.
Efficiency and Profitability Goals
Western Alliance aims to lower its efficiency ratio to 50% and achieve a higher teens return on tangible common equity by year-end 2025.
Lowlights
Net Interest Income Decline
Net interest income decreased $30 million during the fourth quarter due to lower yields on interest-earning assets.
Criticized Assets Increase
Criticized assets rose $61 million in the fourth quarter, although the overall percentage of criticized assets declined year-over-year.
Higher Deposit Insurance Costs
Deposit insurance expenses increased due to higher insured balances, impacting overall expense management.
Company Guidance
During Western Alliance Bancorporation's fourth quarter 2024 earnings call, guidance for 2025 was provided, highlighting a focus on maintaining a strong liquidity position and optimizing asset mix. The company aims for loan growth of approximately $5 billion and deposit growth of $8 billion, targeting a loan-to-deposit ratio around 80%. Net interest income is projected to increase by 6-8%, with non-interest income also expected to rise by the same percentage, driven by diversified revenue streams. The efficiency ratio is anticipated to improve to below 50% by year-end, alongside a return on tangible common equity moving toward the upper teens. Additionally, credit quality remains stable, with net charge-offs expected to remain consistent with 2024 levels.Western Alliance Corporate Events
Executive/Board Changes
Western Alliance CEO Takes Medical Leave; Interim Appointed
Neutral
Dec 11, 2024
Western Alliance Bancorporation announced that its President and CEO, Kenneth A. Vecchione, will take a temporary leave of absence due to a medical diagnosis requiring bypass surgery. During his absence, Dale Gibbons, the Vice Chair and Chief Financial Officer, will serve as interim CEO, ensuring the company’s continued focus on its business plan through a robust emergency succession process.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.