Financial Review: Walker & Dunlop (WD) and Walter Investment Management Corp. (WAC)
Walker & Dunlop (NYSE: WD) and Walter Investment Management Corp. (NYSE:WAC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitabiliy, analyst recommendations and valuation.
Valuation and Earnings
This table compares Walker & Dunlop and Walter Investment Management Corp.’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Walker & Dunlop||$630.10 million||2.45||$141.23 million||$4.52||10.91|
|Walter Investment Management Corp.||$922.29 million||0.04||-$360.66 million||($9.87)||-0.10|
Walker & Dunlop has higher revenue, but lower earnings than Walter Investment Management Corp.. Walter Investment Management Corp. is trading at a lower price-to-earnings ratio than Walker & Dunlop, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Walker & Dunlop and Walter Investment Management Corp., as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Walker & Dunlop||0||3||0||0||2.00|
|Walter Investment Management Corp.||2||1||1||0||1.75|
Walker & Dunlop presently has a consensus target price of $28.00, suggesting a potential downside of 43.22%. Walter Investment Management Corp. has a consensus target price of $1.42, suggesting a potential upside of 43.10%. Given Walter Investment Management Corp.’s higher possible upside, analysts plainly believe Walter Investment Management Corp. is more favorable than Walker & Dunlop.
This table compares Walker & Dunlop and Walter Investment Management Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Walker & Dunlop||22.15%||23.87%||5.03%|
|Walter Investment Management Corp.||-30.19%||-23.03%||-0.43%|
Volatility and Risk
Walker & Dunlop has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, Walter Investment Management Corp. has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.
Insider and Institutional Ownership
80.8% of Walker & Dunlop shares are held by institutional investors. Comparatively, 63.7% of Walter Investment Management Corp. shares are held by institutional investors. 11.7% of Walker & Dunlop shares are held by insiders. Comparatively, 50.1% of Walter Investment Management Corp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Walker & Dunlop beats Walter Investment Management Corp. on 9 of the 13 factors compared between the two stocks.
Walker & Dunlop Company Profile
Walker & Dunlop, Inc. is a holding company, which conducts its operations through Walker & Dunlop, LLC. The Company provides commercial real estate financial products and services primarily to developers and owners of multifamily properties. The Company originates, sells and services a range of multifamily and other commercial real estate financing products, including Multifamily Finance, Federal Housing Administration (FHA) Finance, Capital Markets, and Proprietary Capital. It originates and sells loans through the programs of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac, and together with Fannie Mae, the government-sponsored enterprises (GSEs)), the Government National Mortgage Association (Ginnie Mae) and the Federal Housing Administration, a division of the United States Department of Housing and Urban Development (together with Ginnie Mae, HUD).
Walter Investment Management Corp. Company Profile
Walter Investment Management Corp. is a diversified mortgage banking firm focused primarily on the servicing and origination of residential loans, including reverse loans. The Company operates through three segments: Servicing, Originations and Reverse Mortgage. The Servicing segment consists of operations that perform servicing for third-party credit owners of mortgage loans, as well as its own mortgage loan portfolio. The Servicing segment also includes Insurance, and Loans and Residuals businesses. The Originations segment consists of operations that originate and purchase mortgage loans that are intended for sale to third parties. The Reverse Mortgage segment consists of operations which purchases and originates home equity conversion mortgage that are securitized, but remain on the consolidated balance sheet as collateral for secured borrowings.
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