WD Intrinsic Value Calculation – JMP Downgrades Walker & Dunlop to Market Perform Due to Strained CRE Market
May 4, 2023
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On Tuesday, JMP analysts downgraded Walker & Dunlop ($NYSE:WD)’s rating to Market Perform due to the current strained commercial real estate market. Walker & Dunlop is one of the top providers of commercial real estate finance in the United States. Walker & Dunlop offers integrated financial services that include debt financing, investment sales, and loan servicing. The company also provides loan origination services, including underwriting and due diligence, as well as structured finance services, such as mezzanine debt and tax-exempt financing.
As a result, many businesses are struggling, leading to an increase in loan defaults and a decline in capital markets activity. This has caused a strain on the commercial real estate market, leading JMP analysts to downgrade Walker & Dunlop’s rating to Market Perform.
Price History
On Tuesday, JMP Securities downgraded its rating on Walker & Dunlop stock from Outperform to Market Perform, citing the strained commercial real estate (CRE) market as the key factor. This news caused a significant decline in the stock’s value, with the shares opening at $64.9 and closing at $64.1, representing a 4.5% drop from the prior closing price of 67.2. The downgrade is a reminder that the CRE market is experiencing a significant strain due to the economic disruption caused by the pandemic. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for WD. More…
| Total Revenues | Net Income | Net Margin |
| – | 207.72 | – |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for WD. More…
| Operations | Investing | Financing |
| 1.58k | -133.78 | -1.58k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for WD. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 4.05k | 2.33k | – |
Key Ratios Snapshot
Some of the financial key ratios for WD are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 15.5% | – | – |
| FCF Margin | ROE | ROA |
| – | – | – |
Analysis – WD Intrinsic Value Calculation
At GoodWhale, we have conducted an analysis of WALKER & DUNLOP’s fundamentals and have determined that the fair value of its share is around $85.0. This figure was calculated using our proprietary Valuation Line. At the time of writing, WALKER & DUNLOP share is traded at $64.1, representing a 24.6% undervaluation relative to our calculation. This presents an opportunity for investors to purchase the stock at a relative discount. More…
Peers
It operates through the following segments: Agency Lending, Capital Markets, FHA Finance, and Servicing. The Agency Lending segment offers long-term permanent financing. The Capital Markets segment includes investment sales, loan sales, and commercial servicing. The FHA Finance segment focuses on multifamily and healthcare financing through government-sponsored enterprises. The Servicing segment pertains to loan administration and asset management. The company was founded by William H. Walker, C. Duncan Dunlop, and Howard J. Cooper in 1937 and is headquartered in Bethesda, MD.
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Summary
Walker & Dunlop is a commercial real estate finance company which has recently been given a Market Perform rating by JMP Securities amid a strained CRE market. This has had an immediate effect on the company’s stock price, which has dropped following the announcement. Investors should evaluate their risk tolerance and consider the current volatility in the CRE market before investing in Walker & Dunlop. Analysts suggest that the company’s strong balance sheet and robust origination platform will help it weather the storm.
However, in the near-term, investors should expect to experience reduced returns and increased volatility in the stock price.
