We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Walker & Dunlop (WD) a Great Stock for Value Investors?
Read MoreHide Full Article
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Walker & Dunlop, Inc. (WD - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Walker & Dunlop has a trailing twelve months PE ratio of 9.98. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.83.
This level puts Walker & Dunlop’s current PE ratio slightly below its midpoint (which is 10.08) over the past five years.
Further, the stock’s PE also compares favorably with the broader Finance sector’s trailing twelve months PE ratio, which stands at 15.91. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Walker & Dunlop’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Walker & Dunlop has a P/S ratio of about 1.65. This compares favorably with the S&P 500 average, which stands at 2.84 right now. However, as we can see in the chart below, this is also well below the highs for this stock in particular over the past few years.
If anything, WD is clearly in the lower zone of its range in the time period from a P/S metric, suggesting some level of undervalued trading – at least compared to historical norms.
Broad Value Outlook
In aggregate, Walker & Dunlop currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Walker & Dunlop a solid choice for value investors, and some of its other key metrics make this pretty clear too. For example, its P/CF ratio (another great indicator of value) comes in at 0.91, which is better than the industry average of 1.03. Clearly, WD is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Walker & Dunlop might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives WD a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Walker & Dunlop seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past 60 days compared to none higher, while the full year estimate has seen two upward revisions and none downward in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has fallen by 13% in the past two months, while the full year estimate has gone up by just 3.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Also consider the fact that the company boasts a Zacks Rank #1 (Strong Buy), which indicates robust fundamentals and expectations of outperformance in the near term. Thus, we can say that while investors may expect slight short-term pain, Walker & Dunlop remains a formidable value proposition, with strong supporting growth prospects.
Bottom Line
Walker & Dunlop is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (among the Top 14%) and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Walker & Dunlop (WD) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Walker & Dunlop, Inc. (WD - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Walker & Dunlop has a trailing twelve months PE ratio of 9.98. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.83.
This level puts Walker & Dunlop’s current PE ratio slightly below its midpoint (which is 10.08) over the past five years.
WALKER & DUNLOP PE Ratio (TTM)
WALKER & DUNLOP PE Ratio (TTM) | WALKER & DUNLOP Quote
Further, the stock’s PE also compares favorably with the broader Finance sector’s trailing twelve months PE ratio, which stands at 15.91. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Walker & Dunlop’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Walker & Dunlop has a P/S ratio of about 1.65. This compares favorably with the S&P 500 average, which stands at 2.84 right now. However, as we can see in the chart below, this is also well below the highs for this stock in particular over the past few years.
If anything, WD is clearly in the lower zone of its range in the time period from a P/S metric, suggesting some level of undervalued trading – at least compared to historical norms.
Broad Value Outlook
In aggregate, Walker & Dunlop currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Walker & Dunlop a solid choice for value investors, and some of its other key metrics make this pretty clear too. For example, its P/CF ratio (another great indicator of value) comes in at 0.91, which is better than the industry average of 1.03. Clearly, WD is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Walker & Dunlop might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives WD a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Walker & Dunlop seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past 60 days compared to none higher, while the full year estimate has seen two upward revisions and none downward in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has fallen by 13% in the past two months, while the full year estimate has gone up by just 3.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
WALKER & DUNLOP Price and Consensus
WALKER & DUNLOP Price and Consensus | WALKER & DUNLOP Quote
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Also consider the fact that the company boasts a Zacks Rank #1 (Strong Buy), which indicates robust fundamentals and expectations of outperformance in the near term. Thus, we can say that while investors may expect slight short-term pain, Walker & Dunlop remains a formidable value proposition, with strong supporting growth prospects.
Bottom Line
Walker & Dunlop is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (among the Top 14%) and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.