Can Walker & Dunlop, Inc. (NYSE:WD) Grow Their Earnings? Quant Signal Update

The Earnings to Price yield of Walker & Dunlop, Inc. (NYSE:WD) is 0.097302.  This is calculated by taking the earnings per share and dividing it by the last closing share price.  This is one of the most popular methods investors use to evaluate a company’s financial performance.  Earnings Yield is calculated by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the company.  The Earnings Yield for Walker & Dunlop, Inc. NYSE:WD is 0.045966.  Earnings Yield helps investors measure the return on investment for a given company.  Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value.  The Earnings Yield Five Year average for Walker & Dunlop, Inc. (NYSE:WD) is 0.016634.

Quant Scores/Key Ratios

Now we’ll turn to some key quant data and ratios. The Current Ratio of Walker & Dunlop, Inc. (NYSE:WD) is 1.04. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.

Walker & Dunlop, Inc. (NYSE:WD)’s Leverage Ratio was recently noted as 1.001128. This ratio is calculated by dividing total debt by total assets plus total assets previous year, divided by two. The leverage of a company is relative to the amount of debt on the balance sheet. This ratio is often viewed as one measure of the financial health of a firm.

The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of Walker & Dunlop, Inc. (NYSE:WD) is 38.00000. The more stable the company, the lower the score. If a company is less stable over the course of time, they will have a higher score.

At the time of writing, Walker & Dunlop, Inc. (NYSE:WD) has a Piotroski F-Score of 3. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers. Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Walker & Dunlop, Inc. (NYSE:WD) has an M-score Beneish of -0.756838. This M-score model is a little known investment tool that was developed by Messod Beneish in order to detect manipulation of financial statements. The score uses a combination of eight different variables. The specifics of the variables and formula can be found in the Beneish paper “The Detection of Earnings Manipulation”.

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Walker & Dunlop, Inc. (NYSE:WD) is 70.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Walker & Dunlop, Inc. (NYSE:WD) is 71.

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price.  The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital.  The MF Rank of Walker & Dunlop, Inc. (NYSE:WD) is 3345.  A company with a low rank is considered a good company to invest in.  The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”.

Shifting gears, we can see that Walker & Dunlop, Inc. (NYSE:WD) has a Q.i. Value of 86.00000. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Price Index/Share Movement

We can now take a quick look at some historical stock price index data. Walker & Dunlop, Inc. (NYSE:WD) presently has a 10 month price index of 1.51864. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period. A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 1.69639, the 24 month is 1.59844, and the 36 month is 3.10719. Narrowing in a bit closer, the 5 month price index is 0.99075, the 3 month is 1.02881, and the 1 month is currently 0.90588.

Stock volatility is a percentage that indicates whether a stock is a desirable purchase.  Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year.  The Volatility 12m of Walker & Dunlop, Inc. (NYSE:WD) is 30.208000.  This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized.  The lower the number, a company is thought to have low volatility.  The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months.  The Volatility 3m of Walker & Dunlop, Inc. (NYSE:WD) is 30.786400.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 31.108900.

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