NEW YORK (TheStreet) -- Walter Investment Management (AMEX:WAC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and disappointing return on equity.
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- WAC's very impressive revenue growth greatly exceeded the industry average of 19.4%. Since the same quarter one year prior, revenues leaped by 255.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- WALTER INVESTMENT MGMT CORP has improved earnings per share by 30.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WALTER INVESTMENT MGMT CORP swung to a loss, reporting -$2.44 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($2.83 versus -$2.44).
- The debt-to-equity ratio is very high at 5.42 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, WALTER INVESTMENT MGMT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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