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Walker & Dunlop (WD)
NYSE:WD
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Walker & Dunlop
(NYSE:WD)
62Neutral
Positive Factors
Business Operations
WD's diverse business operations, including debt brokerage, investment sales, and asset management, contribute to over 70% of its cash flow from servicing and associated fees.
Market Position
WD has a strong market position with an 8% market share of multifamily debt originations, ranking #1 with Fannie Mae and #4 with Freddie Mac.
Valuation
WD's valuation is considered attractive at 13.3-15.5x 2025-2026E cash earnings, with potential for further improvement if GSE volumes exceed estimates.
Negative Factors
Earnings Contribution
While escrow balances contributed $43.5M to third quarter earnings, the benefits are contingent on interest rates remaining elevated.
Earnings Performance
The company reported GAAP EPS of $0.85, which was below both consensus and analysts' estimates.
Valuation Concerns
Despite attractive valuation metrics, potential improvement is reliant on GSE volumes exceeding current estimates.
Walker & Dunlop (WD) vs. S&P 500 (SPY)
Market Cap
$2.90B
Dividend Yield3.12%
Average Volume (3M)222.64K
Price to Earnings (P/E)26.8
Beta (1Y)1.52
Revenue Growth2.40%
EPS Growth-0.27%
CountryUS
Employees1,399
SectorFinancial
Sector Strength82
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)3.19
Shares Outstanding33,968,160
10 Day Avg. Volume191,902
30 Day Avg. Volume222,644
Financial Highlights & Ratios
PEG Ratio39.33
Price to Book (P/B)N/A
Price to Sales (P/S)2.70
Price to Cash Flow (P/CF)1.40
P/FCF Ratio1.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$108.33Price Target Upside26.91% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Walker & Dunlop Business Overview & Revenue Model
Company DescriptionWalker & Dunlop, Inc., through its subsidiaries, originates, sells, and services a range of multifamily and other commercial real estate financing products and services for owners and developers of real estate in the United States. The company offers first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, small-balance, and bridge/interim loans. It also provides multifamily finance for manufactured housing communities, student housing, affordable housing, and senior housing properties under the Fannie Mae's DUS program; and construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing, and healthcare facilities. In addition, the company acts as an intermediary in the placement of commercial real estate debt between institutional sources of capital, including life insurance companies, investment banks, commercial banks, pension funds, CMBS conduits, and other institutional investors, as well as owners of various types of commercial real estate. Further, it advises on capital structure; develops the financing package; facilitates negotiations between its client and institutional sources of capital; coordinates due diligence; and assists in closing the transaction. Additionally, the company offers property sales brokerage, underwriting and risk management, and servicing and asset management services. Walker & Dunlop, Inc. was founded in 1937 and is headquartered in Bethesda, Maryland.
How the Company Makes MoneyWalker & Dunlop generates revenue through multiple streams, primarily from its mortgage banking activities, which involve the origination and sale of commercial real estate loans to government-sponsored enterprises like Fannie Mae and Freddie Mac, as well as other institutional investors. The company earns fees from originating and servicing these loans, with servicing fees providing a steady, recurring income stream. Additionally, Walker & Dunlop generates income from its investment sales platform, where it facilitates the sale of commercial properties, earning commissions and advisory fees. The company also benefits from its strategic partnerships and alliances, which enhance its ability to provide a broad array of financing solutions to its clients. Key factors contributing to its earnings include interest rate environments, real estate market trends, and regulatory developments affecting commercial real estate finance.
Walker & Dunlop Financial Statement Overview
Summary
Walker & Dunlop exhibits stable financial performance with positive revenue growth and cash flow improvements. Despite strong profitability metrics and cash management, challenges exist in maintaining operational efficiency and managing leverage. Continued focus on strengthening margins and reducing debt levels would enhance its financial standing.Income Statement
Walker & Dunlop demonstrated a moderate revenue growth of 7.4% from 2023 to 2024, accompanied by stable profitability metrics. The gross profit margin remains strong at 100% due to the nature of the business. Net profit margin also showed resilience, slightly improving to 9.55% in 2024 from 10.18% in 2023. However, EBIT and EBITDA margins have slightly declined over the years, indicating potential operational efficiency challenges.72
Positive
Balance Sheet
The company has a relatively high debt-to-equity ratio of 0.89, reflecting significant leverage which could pose financial risks if not managed carefully. The equity ratio of 39.88% indicates a reasonable reliance on equity financing. ROE decreased slightly to 6.19% in 2024, highlighting modest returns on shareholder equity. Overall, the balance sheet shows a stable but leveraged financial position.65
Positive
Cash Flow
Walker & Dunlop's cash flow performance improved significantly in 2024 with a positive free cash flow of $116.4 million compared to a negative figure in 2023. The free cash flow growth rate is notably strong, reflecting improved cash management. The operating cash flow to net income ratio is 1.20, showing healthy cash conversion from earnings.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.13B | 1.05B | 1.26B | 1.26B | 1.08B | Gross Profit |
| 503.56M | 471.67M | 617.15M | 647.71M | 606.34M | EBIT |
| 131.50M | 138.20M | 264.96M | 352.06M | 330.27M | EBITDA |
| 369.23M | 363.50M | 500.00M | 562.34M | 499.28M | Net Income Common Stockholders |
| 108.17M | 107.36M | 213.82M | 265.76M | 246.18M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 279.27M | 328.70M | 225.95M | 305.63M | 321.10M | Total Assets |
| 4.38B | 4.05B | 4.05B | 5.05B | 4.65B | Total Debt |
| 1.66B | 1.47B | 1.25B | 2.68B | 2.81B | Net Debt |
| 1.38B | 1.14B | 1.02B | 2.38B | 2.49B | Total Liabilities |
| 2.62B | 2.31B | 2.33B | 3.47B | 3.45B | Stockholders Equity |
| 1.75B | 1.72B | 1.69B | 1.55B | 1.20B |
| Cash Flow | Free Cash Flow | |||
| 116.40M | -16.72M | 1.56B | 861.25M | -1.41B | Operating Cash Flow |
| 129.36M | -518.00K | 1.58B | 870.46M | -1.41B | Investing Cash Flow |
| -38.13M | 126.87M | -133.78M | -377.55M | 115.18M | Financing Cash Flow |
| -154.73M | 6.77M | -1.58B | -457.73M | 1.52B |
Walker & Dunlop Technical Analysis
Negative
85.36
Price Trends
88.56
Negative
95.48
Negative
99.50
Negative
Market Momentum
-0.66
Negative
46.20
Neutral
27.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WD, the sentiment is Negative. The current price of 85.36 is below the 20-day moving average (MA) of 85.94, below the 50-day MA of 88.56, and below the 200-day MA of 99.50, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 46.20 is Neutral, neither overbought nor oversold. The STOCH value of 27.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WD.
Walker & Dunlop Risk Analysis
Walker & Dunlop disclosed 29 risk factors in its most recent earnings report. Walker & Dunlop 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
Walker & Dunlop Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $8.99B | 32.76 | 3.38% | 4.24% | 17.48% | 7.45% | |
70 Outperform | $38.84B | 41.58 | 11.61% | ― | 11.95% | -1.25% | |
68 Neutral | $11.65B | 21.97 | 8.37% | ― | 12.87% | 142.90% | |
63 Neutral | $14.20B | 10.11 | 9.01% | 4.34% | 16.34% | -11.27% | |
62 Neutral | $2.90B | 26.77 | 6.09% | 3.12% | 2.40% | -0.27% | |
52 Neutral | $4.35B | 732.19 | 0.71% | 5.22% | 5.12% | ― |
* Financial Sector Average
Performance Comparison
WD
Walker & Dunlop
85.36
-10.71
-11.15%
CBRE
CBRE Group
130.78
35.80
37.69%
JLL
Jones Lang Lasalle
247.91
57.60
30.27%
SLG
SL Green Realty
57.70
7.25
14.37%
REXR
Rexford Industrial Realty
39.15
-7.80
-16.61%
CIGI
Colliers International Group
121.30
2.29
1.92%
Walker & Dunlop Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -5.43% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
Walker & Dunlop showed significant growth in transaction volumes and earnings per share, alongside record adjusted EBITDA. However, challenges remain, including credit issues resulting in loan buybacks and a valuation adjustment in affordable housing assets.Highlights
Record Transaction Volume
Walker & Dunlop closed $13.4 billion in total transaction volume in Q4 2024, up 45% year-over-year.
Increased Earnings Per Share
Diluted earnings per share increased by 42% from Q4 2023, reaching $1.32.
Strong Agency Loan Originations
Agency loan originations totaled $4.9 billion, with revenues from mortgage servicing rights up 62% from Q4 2023.
Record Adjusted EBITDA
Adjusted EBITDA reached a record $329 million for the full year 2024, up 9% from 2023.
Growth in Appraisal and Small Balance Lending
The Apprise business doubled quarterly revenues to $4.9 million in Q4, with a total of $13.3 million in 2024, up 43% year-over-year. Small Balance Lending revenues grew 20%.
Lowlights
Decrease in Adjusted Core EPS
Adjusted core EPS was $1.34, down 6% from last year.
Credit Challenges and Loan Buybacks
Walker & Dunlop repurchased five loans from the GSEs due to mistakes and sophisticated fraud schemes, recognizing $24 million of related expenses.
Valuation Adjustments in Affordable Housing
A $13 million downward adjustment was recognized due to missed realization goals in the slow sales market.
Company Guidance
During the Walker & Dunlop Q4 2024 earnings call, the company reported a strong finish to the year, closing $13.4 billion in total transaction volume, a 45% increase from the previous year, and generating diluted earnings per share (EPS) of $1.32, reflecting a 42% rise from Q4 2023. The quarter saw agency loan originations totaling $4.9 billion, boosting mortgage servicing rights revenues by 62% year-over-year. The adjusted EBITDA for Q4 was $95 million, representing an 8% increase, while adjusted core EPS was $1.34, showing a 6% decline. For the full year, Walker & Dunlop achieved a diluted EPS of $3.19, remaining flat from 2023, an adjusted core EPS of $4.97, a 6% increase, and a record adjusted EBITDA of $329 million, up 9%. The company also noted significant growth in Fannie Mae and Freddie Mac loan originations and closed $3.5 billion in property sales transactions during Q4, marking a 20% year-over-year increase. Despite interest rate challenges, the company maintained strong momentum and made strategic expansions in hospitality and affordable housing sectors, along with international growth initiatives. Walker & Dunlop remains optimistic about 2025, projecting high single-digit to double-digit growth in diluted EPS, with expectations for flat to high single-digit increases in adjusted EBITDA and adjusted core EPS.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.