Walker & Dunlop Upped To Strong Buy On Upbeat Outlook

On Aug 12, the Zacks Investment Research upgraded Maryland-based Walker & Dunlop, Inc. (NYSE:WD) to a Zacks Rank #1 (Strong Buy).

Upgrade Drivers: Q2 Earnings Beat & Strong Guidance

On Aug 3, 2016, Walker & Dunlop announced the second-quarter 2016 results. Earnings of $1.05 per share surpassed the Zacks Consensus Estimate by 38.2%. Further, it was up 59% from the prior-year quarter.

Results benefited from 30% rise in revenues and 25% fall in provision for credit losses. Further, Walker & Dunlop witnessed loan origination volume of $4.8 billion, up 37% year over year. However, an 18% increase in total expenses was on the downside.

Additionally, Walker & Dunlop provided an upbeat outlook. The company remains on track to achieve double digit earnings growth in 2016. Moreover, operating margin is projected to outpace mid-to-upper 20% target. Further, Walker & Dunlop anticipates gain on sale margin to be 1.70–1.90%, up from the prior outlook of 1.60–1.80%.

Walker & Dunlop plans to grow its interim loan portfolio to nearly $400 million by 2016 end.

Walker & Dunlop reiterated the outlook with respect to the acquisition of HUD servicing portfolio. The deal is likely to add nearly 6 cents per share annually. Moreover, the annual servicing revenue is expected to be approximately $6.3 billion from the transaction.

Estimates Trend Upwards

Driven by this positive guidance, analysts are bullish on Walker & Dunlop stock. Notably, the Zacks Consensus Estimate for 2016 has jumped 13.1% over the past 30 days to $3.10, while estimates for 2017 increased 10.6% to $3.12, over the same time frame.

Other Stocks that Warrant a Look

Some similarly-ranked finance stocks include Hancock Holding Company (NASDAQ:HBHC) , State Bank Financial Corporation (NASDAQ:STBZ) and Comerica Incorporated (NYSE:CMA) .