Intrinsic value of Walker&Dunlop - WD

Previous Close

$50.58

  Intrinsic Value

$1,482

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+738%

Previous close

$50.58

 
Intrinsic value

$1,482

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+738%

Our model is not good at valuating stocks of financial companies, such as WD.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  22.86
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  575
  920
  1,421
  2,126
  3,084
  4,351
  5,982
  8,030
  10,544
  13,567
  17,137
  21,280
  26,017
  31,359
  37,311
  43,871
  51,033
  58,785
  67,117
  76,013
  85,461
  95,449
  105,965
  117,003
  128,557
  140,624
  153,208
  166,313
  179,948
  194,125
  208,860
Variable operating expenses, $m
 
  484
  742
  1,105
  1,599
  2,251
  3,091
  4,146
  5,441
  6,999
  8,837
  10,962
  13,402
  16,154
  19,220
  22,599
  26,288
  30,282
  34,574
  39,157
  44,024
  49,169
  54,586
  60,272
  66,223
  72,440
  78,922
  85,673
  92,696
  99,999
  107,590
Fixed operating expenses, $m
 
  88
  90
  93
  95
  97
  100
  102
  105
  107
  110
  113
  116
  119
  122
  125
  128
  131
  134
  137
  141
  144
  148
  152
  156
  159
  163
  168
  172
  176
  180
Total operating expenses, $m
  390
  572
  832
  1,198
  1,694
  2,348
  3,191
  4,248
  5,546
  7,106
  8,947
  11,075
  13,518
  16,273
  19,342
  22,724
  26,416
  30,413
  34,708
  39,294
  44,165
  49,313
  54,734
  60,424
  66,379
  72,599
  79,085
  85,841
  92,868
  100,175
  107,770
Operating income, $m
  186
  348
  589
  928
  1,391
  2,003
  2,791
  3,782
  4,998
  6,461
  8,189
  10,205
  12,499
  15,086
  17,969
  21,147
  24,616
  28,372
  32,409
  36,719
  41,297
  46,136
  51,231
  56,579
  62,178
  68,025
  74,122
  80,473
  87,079
  93,949
  101,089
EBITDA, $m
  297
  433
  714
  1,111
  1,651
  2,366
  3,287
  4,443
  5,864
  7,573
  9,590
  11,933
  14,612
  17,633
  20,999
  24,710
  28,760
  33,146
  37,859
  42,891
  48,236
  53,886
  59,836
  66,080
  72,616
  79,444
  86,563
  93,977
  101,691
  109,712
  118,049
Interest expense (income), $m
  39
  75
  127
  201
  306
  448
  636
  878
  1,183
  1,556
  2,005
  2,535
  3,150
  3,854
  4,647
  5,531
  6,506
  7,569
  8,721
  9,958
  11,280
  12,683
  14,166
  15,728
  17,368
  19,084
  20,876
  22,745
  24,691
  26,716
  28,822
Earnings before tax, $m
  186
  273
  463
  727
  1,085
  1,555
  2,155
  2,903
  3,815
  4,905
  6,184
  7,670
  9,349
  11,232
  13,322
  15,616
  18,111
  20,803
  23,688
  26,761
  30,017
  33,453
  37,065
  40,851
  44,810
  48,941
  53,247
  57,728
  62,388
  67,233
  72,267
Tax expense, $m
  72
  74
  125
  196
  293
  420
  582
  784
  1,030
  1,324
  1,670
  2,071
  2,524
  3,033
  3,597
  4,216
  4,890
  5,617
  6,396
  7,225
  8,105
  9,032
  10,008
  11,030
  12,099
  13,214
  14,377
  15,586
  16,845
  18,153
  19,512
Net income, $m
  114
  199
  338
  531
  792
  1,135
  1,573
  2,119
  2,785
  3,581
  4,515
  5,599
  6,824
  8,200
  9,725
  11,399
  13,221
  15,186
  17,292
  19,535
  21,912
  24,421
  27,057
  29,821
  32,711
  35,727
  38,870
  42,141
  45,543
  49,080
  52,755

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  119
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,052
  4,767
  7,365
  11,014
  15,981
  22,547
  30,996
  41,606
  54,631
  70,297
  88,791
  110,259
  134,802
  162,482
  193,321
  227,311
  264,418
  304,587
  347,754
  393,850
  442,804
  494,553
  549,043
  606,233
  666,096
  728,624
  793,824
  861,725
  932,371
  1,005,827
  1,082,175
Adjusted assets (=assets-cash), $m
  2,933
  4,767
  7,365
  11,014
  15,981
  22,547
  30,996
  41,606
  54,631
  70,297
  88,791
  110,259
  134,802
  162,482
  193,321
  227,311
  264,418
  304,587
  347,754
  393,850
  442,804
  494,553
  549,043
  606,233
  666,096
  728,624
  793,824
  861,725
  932,371
  1,005,827
  1,082,175
Revenue / Adjusted assets
  0.196
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
Average production assets, $m
  467
  747
  1,154
  1,726
  2,504
  3,533
  4,858
  6,520
  8,562
  11,017
  13,915
  17,279
  21,126
  25,463
  30,296
  35,623
  41,438
  47,734
  54,499
  61,723
  69,394
  77,504
  86,044
  95,006
  104,388
  114,187
  124,405
  135,046
  146,117
  157,629
  169,594
Working capital, $m
  0
  -92
  -142
  -213
  -308
  -435
  -598
  -803
  -1,054
  -1,357
  -1,714
  -2,128
  -2,602
  -3,136
  -3,731
  -4,387
  -5,103
  -5,879
  -6,712
  -7,601
  -8,546
  -9,545
  -10,597
  -11,700
  -12,856
  -14,062
  -15,321
  -16,631
  -17,995
  -19,412
  -20,886
Total debt, $m
  2,154
  3,616
  5,744
  8,732
  12,800
  18,178
  25,098
  33,787
  44,455
  57,286
  72,432
  90,014
  110,115
  132,784
  158,042
  185,880
  216,270
  249,169
  284,523
  322,275
  362,368
  404,751
  449,378
  496,217
  545,245
  596,455
  649,854
  705,464
  763,324
  823,484
  886,013
Total liabilities, $m
  2,442
  3,904
  6,032
  9,020
  13,088
  18,466
  25,386
  34,075
  44,743
  57,574
  72,720
  90,302
  110,403
  133,072
  158,330
  186,168
  216,558
  249,457
  284,811
  322,563
  362,656
  405,039
  449,666
  496,505
  545,533
  596,743
  650,142
  705,752
  763,612
  823,772
  886,301
Total equity, $m
  610
  863
  1,333
  1,994
  2,893
  4,081
  5,610
  7,531
  9,888
  12,724
  16,071
  19,957
  24,399
  29,409
  34,991
  41,143
  47,860
  55,130
  62,944
  71,287
  80,148
  89,514
  99,377
  109,728
  120,563
  131,881
  143,682
  155,972
  168,759
  182,055
  195,874
Total liabilities and equity, $m
  3,052
  4,767
  7,365
  11,014
  15,981
  22,547
  30,996
  41,606
  54,631
  70,298
  88,791
  110,259
  134,802
  162,481
  193,321
  227,311
  264,418
  304,587
  347,755
  393,850
  442,804
  494,553
  549,043
  606,233
  666,096
  728,624
  793,824
  861,724
  932,371
  1,005,827
  1,082,175
Debt-to-equity ratio
  3.531
  4.190
  4.310
  4.380
  4.430
  4.450
  4.470
  4.490
  4.500
  4.500
  4.510
  4.510
  4.510
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
  4.520
Adjusted equity ratio
  0.167
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  114
  199
  338
  531
  792
  1,135
  1,573
  2,119
  2,785
  3,581
  4,515
  5,599
  6,824
  8,200
  9,725
  11,399
  13,221
  15,186
  17,292
  19,535
  21,912
  24,421
  27,057
  29,821
  32,711
  35,727
  38,870
  42,141
  45,543
  49,080
  52,755
Depreciation, amort., depletion, $m
  111
  84
  125
  182
  260
  363
  495
  662
  866
  1,111
  1,401
  1,728
  2,113
  2,546
  3,030
  3,562
  4,144
  4,773
  5,450
  6,172
  6,939
  7,750
  8,604
  9,501
  10,439
  11,419
  12,440
  13,505
  14,612
  15,763
  16,959
Funds from operations, $m
  778
  284
  463
  713
  1,052
  1,498
  2,069
  2,781
  3,651
  4,692
  5,916
  7,327
  8,937
  10,746
  12,755
  14,962
  17,365
  19,959
  22,742
  25,708
  28,852
  32,171
  35,662
  39,322
  43,150
  47,146
  51,310
  55,646
  60,155
  64,843
  69,715
Change in working capital, $m
  19
  -35
  -50
  -70
  -96
  -127
  -163
  -205
  -251
  -302
  -357
  -414
  -474
  -534
  -595
  -656
  -716
  -775
  -833
  -890
  -945
  -999
  -1,052
  -1,104
  -1,155
  -1,207
  -1,258
  -1,310
  -1,363
  -1,418
  -1,474
Cash from operations, $m
  759
  318
  513
  784
  1,148
  1,625
  2,232
  2,986
  3,902
  4,995
  6,273
  7,741
  9,411
  11,280
  13,350
  15,618
  18,081
  20,735
  23,575
  26,597
  29,797
  33,170
  36,714
  40,426
  44,305
  48,353
  52,569
  56,956
  61,519
  66,261
  71,188
Maintenance CAPEX, $m
  0
  -47
  -75
  -115
  -173
  -250
  -353
  -486
  -652
  -856
  -1,102
  -1,392
  -1,728
  -2,113
  -2,546
  -3,030
  -3,562
  -4,144
  -4,773
  -5,450
  -6,172
  -6,939
  -7,750
  -8,604
  -9,501
  -10,439
  -11,419
  -12,440
  -13,505
  -14,612
  -15,763
New CAPEX, $m
  -2
  -280
  -407
  -572
  -778
  -1,029
  -1,324
  -1,663
  -2,041
  -2,455
  -2,898
  -3,364
  -3,846
  -4,338
  -4,833
  -5,327
  -5,815
  -6,295
  -6,765
  -7,224
  -7,672
  -8,110
  -8,539
  -8,963
  -9,382
  -9,799
  -10,218
  -10,641
  -11,071
  -11,512
  -11,965
Cash from investing activities, $m
  -67
  -327
  -482
  -687
  -951
  -1,279
  -1,677
  -2,149
  -2,693
  -3,311
  -4,000
  -4,756
  -5,574
  -6,451
  -7,379
  -8,357
  -9,377
  -10,439
  -11,538
  -12,674
  -13,844
  -15,049
  -16,289
  -17,567
  -18,883
  -20,238
  -21,637
  -23,081
  -24,576
  -26,124
  -27,728
Free cash flow, $m
  692
  -9
  31
  96
  197
  345
  554
  837
  1,209
  1,683
  2,273
  2,986
  3,836
  4,830
  5,971
  7,261
  8,703
  10,296
  12,037
  13,923
  15,952
  18,120
  20,424
  22,859
  25,423
  28,115
  30,932
  33,875
  36,943
  40,137
  43,460
Issuance/(repayment) of debt, $m
  -681
  1,462
  2,128
  2,989
  4,068
  5,377
  6,920
  8,689
  10,668
  12,830
  15,147
  17,582
  20,101
  22,670
  25,257
  27,838
  30,390
  32,899
  35,354
  37,752
  40,094
  42,383
  44,627
  46,838
  49,028
  51,210
  53,399
  55,611
  57,859
  60,160
  62,529
Issuance/(repurchase) of shares, $m
  -9
  125
  133
  130
  107
  53
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -694
  1,587
  2,261
  3,119
  4,175
  5,430
  6,920
  8,689
  10,668
  12,830
  15,147
  17,582
  20,101
  22,670
  25,257
  27,838
  30,390
  32,899
  35,354
  37,752
  40,094
  42,383
  44,627
  46,838
  49,028
  51,210
  53,399
  55,611
  57,859
  60,160
  62,529
Total cash flow (excl. dividends), $m
  -1
  1,579
  2,291
  3,215
  4,372
  5,776
  7,474
  9,527
  11,877
  14,514
  17,419
  20,567
  23,937
  27,500
  31,228
  35,099
  39,093
  43,194
  47,391
  51,676
  56,046
  60,503
  65,051
  69,697
  74,451
  79,325
  84,331
  89,485
  94,802
  100,298
  105,989
Retained Cash Flow (-), $m
  -122
  -324
  -470
  -661
  -899
  -1,188
  -1,529
  -1,920
  -2,358
  -2,836
  -3,347
  -3,886
  -4,442
  -5,010
  -5,582
  -6,152
  -6,716
  -7,271
  -7,813
  -8,343
  -8,861
  -9,367
  -9,863
  -10,351
  -10,835
  -11,317
  -11,801
  -12,290
  -12,787
  -13,296
  -13,819
Prev. year cash balance distribution, $m
 
  72
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,326
  1,821
  2,554
  3,473
  4,588
  5,945
  7,606
  9,519
  11,678
  14,072
  16,682
  19,495
  22,489
  25,646
  28,947
  32,377
  35,924
  39,577
  43,332
  47,185
  51,136
  55,188
  59,346
  63,616
  68,007
  72,530
  77,195
  82,015
  87,002
  92,170
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  1,221
  1,532
  1,946
  2,376
  2,791
  3,183
  3,545
  3,817
  3,980
  4,022
  3,944
  3,756
  3,476
  3,128
  2,737
  2,330
  1,928
  1,552
  1,215
  924
  683
  489
  340
  229
  150
  94
  57
  34
  19
  10
Current shareholders' claim on cash, %
  100
  91.6
  86.3
  83.1
  81.4
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8
  80.8

Walker & Dunlop, Inc., through its subsidiaries, originates, sells, and services a range of multifamily and other commercial real estate financing products for owners and developers of real estate in the United States. The company offers a range of commercial real estate finance products, including first mortgage, second trust, construction, mezzanine, and bridge/interim loans, as well as supplemental financings through the programs of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and the Federal Housing Administration. It also provides multifamily finance for multifamily, manufactured housing communities, student housing, affordable, and housing properties under the Fannie Mae DUS program; and FHA finance, such as construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing, and healthcare facilities. In addition, the company acts as an intermediary in the placement of commercial real estate debt between institutional sources of capital, including life insurance companies, investment banks, commercial banks, pension funds, commercial mortgage backed securities (CMBS) issuers, and other institutional investors, as well as owners of various types of commercial real estate. Further, it advises on capital structure; develops the financing package; facilitates negotiations between its client and institutional sources of capital; coordinates due diligence; and assists in closing the transaction, as well as offers interim loans and CMBS products. Walker & Dunlop, Inc. was founded in 1937 and is headquartered in Bethesda, Maryland.

FINANCIAL RATIOS  of  Walker&Dunlop (WD)

Valuation Ratios
P/E Ratio 13.1
Price to Sales 2.6
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 2
Price to Free Cash Flow 2
Growth Rates
Sales Growth Rate 22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate -16.7%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 353.1%
Total Debt to Equity 353.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 3.8%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 20.8%
Return On Equity - 3 Yr. Avg. 16.9%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 58.4%
EBITDA Margin - 3 Yr. Avg. 55.8%
Operating Margin 32.2%
Oper. Margin - 3 Yr. Avg. 28.1%
Pre-Tax Margin 32.3%
Pre-Tax Margin - 3 Yr. Avg. 28.2%
Net Profit Margin 19.8%
Net Profit Margin - 3 Yr. Avg. 17.2%
Effective Tax Rate 38.7%
Eff/ Tax Rate - 3 Yr. Avg. 38.8%
Payout Ratio 0%

WD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WD stock intrinsic value calculation we used $575 million for the last fiscal year's total revenue generated by Walker&Dunlop. The default revenue input number comes from 2016 income statement of Walker&Dunlop. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WD stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.6%, whose default value for WD is calculated based on our internal credit rating of Walker&Dunlop, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Walker&Dunlop.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WD stock the variable cost ratio is equal to 53.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $86 million in the base year in the intrinsic value calculation for WD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Walker&Dunlop.

Corporate tax rate of 27% is the nominal tax rate for Walker&Dunlop. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WD are equal to 81.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Walker&Dunlop operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WD is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $610 million for Walker&Dunlop - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 30.454 million for Walker&Dunlop is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Walker&Dunlop at the current share price and the inputted number of shares is $1.5 billion.

RELATED COMPANIES Price Int.Val. Rating
SNFCA Security Natio 6.30 34.56  str.buy
ATAX America First 6.05 20.06  str.buy
EFC Ellington Fina 16.14 4.93  str.sell
CBG CBRE Group 37.90 29.90  hold
WAC Walter Investm 0.730 16.49  str.buy
PHH PHH 13.94 5.15  str.sell
PFSI PennyMac Finan 17.45 136.77  str.buy

COMPANY NEWS

▶ Top Ranked Growth Stocks to Buy for July 14th   [Jul-14-17 08:53AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for July 12th   [Jul-12-17 11:50AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for July 10th   [Jul-10-17 09:45AM  Zacks]
▶ Walker & Dunlop Adds Dallas Capital Markets Expert   [Jun-26-17 04:16PM  PR Newswire]
▶ Top Ranked Growth Stocks to Buy for June 20th   [Jun-20-17 10:50AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for June 12th   [Jun-12-17 10:41AM  Zacks]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [Jun-09-17 05:08PM  Investor's Business Daily]
▶ Top Ranked Growth Stocks to Buy for June 6th   [Jun-06-17 11:10AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for May 30th   [May-30-17 10:43AM  Zacks]
▶ Why Walker & Dunlop Inc. Stock Jumped Today   [May-03-17 04:31PM  Motley Fool]
▶ Walker & Dunlop posts 1Q profit   [06:06AM  Associated Press]
▶ Walker & Dunlop Achieves "Top Five" Strategic Goal   [Apr-11-17 04:07PM  PR Newswire]
▶ Three Small Caps to Buy for the Second Quarter   [Apr-05-17 12:35PM  Investopedia]
▶ Walker & Dunlop Named a Best Workplace   [Mar-29-17 06:30AM  PR Newswire]
▶ Walker & Dunlop Maintains Growth Momentum with New Hires   [Mar-21-17 04:07PM  PR Newswire]
▶ Top Stock Picks for the Week of March 20th   [Mar-20-17 03:52PM  Zacks]
▶ Walker & Dunlop Expands HUD Origination Team   [Dec-20-16 05:02PM  PR Newswire]
▶ Walker & Dunlop Expands Investment Sales Platform   [Dec-13-16 06:30AM  PR Newswire]
▶ Is Walker & Dunlop Inc. (WD) Going to Burn These Hedge Funds?   [Dec-12-16 10:06AM  at Insider Monkey]
▶ Walker & Dunlop Completes Acquisition of Elkins Mortgage   [Nov-28-16 05:25PM  PR Newswire]
Stock chart of WD Financial statements of WD Annual reports of WD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.