Why Walker & Dunlop Shares Dropped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Walker & Dunlop were tumbling today, down as much as 20% after it lowered its loan origination guidance for the current quarter.
So what: The commercial real estate lender dropped its loan origination forecast to $1.7-$1.9 billion from a previous range of $2.0-$2.5 billion, blaming rising interest rates and caps on loans that Fannie Mae and Freddie Mac can hold. Walker & Dunlop sells about half of its loans to Fannie & Freddie. Year-to-date loan originations are still projected to be up 43-48% from a year ago, however. Separately, the company also entered into a $150-$200 million term loan today.
Now what:Today's drop was the second such decline for Walker & Dunlop in just two months; shares dropped 15% on August 8 after the company delivered a disappointing earnings report. In fact, Walker & Dunlop has badly missed earnings estimates in its last three quarters, generally a red flag for stocks. Shares are down 40% in that time, and show no sign of rebounding after today's update. The stock may seem cheap at a P/E around 8, but I'd like to see conditions improve before getting on board.
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The article Why Walker & Dunlop Shares Dropped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Walker & Dunlop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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