Walter Investment Management (WAC) Is Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Walter Investment Management ( WAC) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Walter Investment Management as such a stock due to the following factors:

  • WAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $71.5 million.
  • WAC has traded 354,200 shares today.
  • WAC is down 3% today.
  • WAC was up 8.4% yesterday.

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More details on WAC:

Walter Investment Management Corp., together with its subsidiaries, provides business services to the residential mortgage industry in the United States. WAC has a PE ratio of 4.1. Currently there are 5 analysts that rate Walter Investment Management a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Walter Investment Management has been 888,800 shares per day over the past 30 days. Walter Investment Management has a market cap of $1.0 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.71 and a short float of 14.2% with 1.75 days to cover. Shares are down 23.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Walter Investment Management as a sell. 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 ratings report include:
  • 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 44.25%, 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 -6.95%.
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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