Why Walter Investment Management (WAC) Stock Is Dropping Today

NEW YORK (TheStreet) -- Shares of Walter Investment Management (WAC) are down 1.66% to $24.30 after Barclays (BCS) assumed coverage with an "underweight" rating and a $22 price target.

The firm's price objective indicates a potential downside of 10.97% from the stocks previous close.

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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 a few notable 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 109.0% when compared to the same quarter one year ago, falling from $143.23 million to -$12.93 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Capital Markets industry and the overall market, WALTER INVESTMENT MGMT CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for WALTER INVESTMENT MGMT CORP is currently lower than what is desirable, coming in at 30.32%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -3.12% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 109.06% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • WALTER INVESTMENT MGMT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WALTER INVESTMENT MGMT CORP turned its bottom line around by earning $6.64 versus -$0.59 in the prior year. For the next year, the market is expecting a contraction of 19.2% in earnings ($5.37 versus $6.64).
  • You can view the full analysis from the report here: WAC Ratings Report

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