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TheStreet Open House

Why Walter Investment Management (WAC) Is Falling Today

NEW YORK (TheStreet) -- Walter Investment Management (WAC) was falling 8.8% to $25.78 after missing analysts' earnings estimates in the fourth quarter.

For the fourth-quarter, the company posted earnings of $1.07 a share, 14 cents below the Capital IQ Consensus Estimate of $1.21 per share. Revenue rose 135.6% to $402.8 million in the quarter, compared to estimates of $400.3 million.

Looking forward to full-year 2014, Walter Investment Management expects earnings of between $5.25 and $6.25 a share. Analysts expect earnings of $5.99 a share for the year.

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TheStreet Ratings team rates WALTER INVESTMENT MGMT CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WALTER INVESTMENT MGMT CORP (WAC) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WAC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 44.38%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 40.07% is the gross profit margin for WALTER INVESTMENT MGMT CORP which we consider to be strong. Regardless of WAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.58% trails the industry average.
  • Net operating cash flow has significantly increased by 625.94% to $14.01 million when compared to the same quarter last year. In addition, WALTER INVESTMENT MGMT CORP has also vastly surpassed the industry average cash flow growth rate of -112.87%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Capital Markets industry and the overall market, WALTER INVESTMENT MGMT CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • You can view the full analysis from the report here: WAC Ratings Report

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