Walker & Dunlop Answered Biggest Question From An Analyst In The Last Quarter
For much of 2020, the actions of Walker & Dunlop (NYSE: WD) were down 20% or more from the start of the year – and for good reason. Walker & Dunlop provides financial services for commercial real estate, and the coronavirus pandemic has taken its toll on the industry this year.
But when the company announced its third-quarter results, it responded to serious concerns about how it would do business. In the October 29 edition of “The Wrap” on Motley Fool Live, host Jason Hall discussed the company’s recent earnings and how they’ve answered its biggest questions in an overwhelmingly positive way.
Jason Hall: Walker & Dunlop, the ticker is WD, and for those of you who aren’t familiar with the business, they’re big in commercial real estate, issuing loans, managing loans, just a really big player. It’s a really dispersed business. It has a ton of room for consolidation. The objective of Walker & Dunlop is to consolidate and increase its market share.
At the start of the second half of the year, my biggest concern for this business personally – I’m a shareholder and I follow the business pretty closely – is so much what it does is servicing commercial real estate loans. The way a business makes money when it does this is that it gets a glimpse of the income, the payout as it arrives. With so many companies at risk of not being able to keep up with their payments, I was concerned that this would impact Walker & Dunlop’s bottom line.
But the two things we’ve seen is that a lot of business has been a lot stronger than expected in terms of cash flow generation, and the Walker & Dunlop business has absolutely held up. The company reported third quarter revenue of $ 247 million, an increase of 16%. The net result is up 21%. On a per share basis, it was up 19%. Very strong, their service portfolio grew 13% to more than $ 103 billion in loans they manage.
The company has not only resisted, but has grown. They increased their market share, I think, by 69% – Willy Walker, their CEO, he’s the grandson of the company founder, so the family is still involved. There is a lot of added value there. He said 69% of quarterly loan refinancing activity was done on new loans for Walker & Dunlop, 25% of debt financing was done with new customers. It is an enlarged market share. It is really good. This is exactly what you want to see Walker & Dunlop do.
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