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Why Is WaFd (WAFD) Up 10.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for WaFd (WAFD - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is WaFd due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

WaFd Q4 Earnings & Revenues Lag, NII Declines Y/Y

WaFd’s fourth-quarter fiscal 2023 (ended Sep 30) earnings of 72 cents per share missed the Zacks Consensus Estimate of 91 cents. Moreover, the bottom line declined 32.7% year over year.

Results reflected a fall in net interest income (NII) and other income, thereby hurting the top line. Also, higher provisions on the back of a deteriorating economic outlook acted as a spoilsport. However, a slight decline in other expenses and a marginal rise in loan balance were positives.

Net income available to common shareholders was $46.6 million, down 33.2% from the prior-year quarter. Our estimate for the metric was $58.2 million.

Fiscal 2023 earnings per share of $3.72 climbed 9.7% but lagged the consensus estimate of $3.91. Further, net income available to common shareholders increased 9.5% to $242.8 million.

Revenues & Expenses Down

Net revenues in the quarter were $178.03 million, down 5.4% from the year-ago quarter. Moreover, the top line lagged the Zacks Consensus Estimate of $186.59 million.

Fiscal 2023 net revenues of $742.4 million grew 12.3%. The top line, however, missed the consensus estimate of $755.09 million.

NII came in at $163.7 million, falling 5.7% from the year-ago quarter. NIM was 3.13%, contracting 51 basis points (bps). Our estimates for NII and NIM were $173.7 million and 3.39%, respectively.

Total other income of $14.3 million declined 1%. The decrease was mainly due to a substantial decline in loan fee income. Our estimate for total other income was $12.9 million.

Total other expenses amounted to $92.2 million, down 1% from the year-ago quarter. Lower compensation and benefits, and other expenses more than offset the rise in FDIC insurance premiums, product delivery and information technology costs, leading to the overall decline. Our estimate for total other expenses was $102.9 million.

The company’s efficiency ratio was 51.78%, up from 49.52% a year ago. A rise in the efficiency ratio reflects lower profitability.

As of Sep 30, 2023, net loans receivable amounted to $17.48 billion, up marginally from the prior quarter's end. Total customer deposits were $16.07 billion, slightly lower than the previous quarter.

At the end of the fiscal fourth quarter, the return on average common equity was 8.73%, down from 14.22% at the end of the prior-year quarter. Return on average assets was 0.90%, down from 1.44% at the end of the prior-year quarter.

Credit Quality Worsens

As of Sep 30, the allowance for credit losses (including reserve for unfunded commitments) was 1.03% of gross loans outstanding, down 3 bps from the prior quarter end. Also, the ratio of non-performing assets to total assets was 0.26%, up 5 bps.

In the reported quarter, the provision for credit losses was $26.5 million, substantially higher than $1.5 million at the previous quarter's end.

Share Repurchase Update

During the quarter, WaFd repurchased 428 shares at an average price of $30.41 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -16.76% due to these changes.

VGM Scores

At this time, WaFd has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise WaFd has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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