Much ado about nothing
If shareholders in commercial multi-family lending company Walker & Dunlop, Inc. (NYSE:WD) only read the first couple of highlights in its most recent quarterly report, they’d be struggling to figure out why their stock tanked by 25% last month. Nearly every figure was up across the board thanks to W&D’s acquisition of CW Capital, which resulted in a 94% boost in revenue, a 91% increase in loan origination growth, and a 65% rise in adjusted net income. Game-set-match, right?
Well, unfortunately for W&D shareholders, the Department of Housing and Urban Development ran out of commitment authority and the Federal Housing Finance Agency levied a 10% reduction on 2013’s government-sponsored entity lending volumes for multifamily properties during the quarter. Simply put, this means lower loan originations for W&D, since it originates most of its loans in the multifamily space.
However, shareholders should relax and not overthink the magnitude of this temporary paring back by the FHFA. In total, W&D merely lowered its full-year originations guidance to $9 billion to $11 billion from its previous forecast of $10 billion to $12 billion. Overall, though, this would still represent net revenue growth this year of 35% and a projection of 11% revenue growth next year. Fundamentally, at less than eight times forward earnings, unless the government is going to put the kibosh on GSE-based multifamily lending for many years down the road, then W&D could make for an intriguing value buy here.
Foolish roundup
This week’s theme is all about not overthinking the reason for the move lower in each stock. Sure, Lightinthebox Holding Co Ltd-ADR (NYSE:LITB) and Walker & Dunlop put up a quarterly stinker, and interest rates aren’t working in Weingarten Realty Investors (NYSE:WRI)’s favor as much as they were a few months prior; but these companies also offer unique niche, growth, or value advantages to their peers that make them attractive.
I’m so confident that these three names will bounce off their lows that I’m going to make a CAPScall of outperform on each one.
The article 3 Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Walker & Dunlop.
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