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Will Walker & Dunlop, Inc.’s (NYSE:WD) Earnings Grow Over The Next Few Years?

Simply Wall St

The latest earnings release Walker & Dunlop, Inc.’s (NYSE:WD) announced in December 2018 revealed that the company experienced a substantial headwind with earnings declining by -24%. Today I want to provide a brief commentary on how market analysts perceive Walker & Dunlop’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Walker & Dunlop

Market analysts’ prospects for this coming year seems rather subdued, with earnings climbing by a single digit 3.8%. The growth outlook in the following year seems much more positive with rates reaching double digit 15% compared to today’s earnings, and finally hitting US$203m by 2022.

NYSE:WD Past and Future Earnings, February 28th 2019

While it is useful to be aware of the rate of growth each year relative to today’s level, it may be more beneficial to gauge the rate at which the earnings are growing on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Walker & Dunlop’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 7.4%. This means that, we can assume Walker & Dunlop will grow its earnings by 7.4% every year for the next couple of years.

Next Steps:

For Walker & Dunlop, there are three relevant aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is WD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WD is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WD? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.