Since Walker & Dunlop Inc (NYSE:WD) released its earnings in December 2017, analyst forecasts appear to be pessimistic, with profits predicted to drop by -15.53% next year compared with the past 5-year average growth rate of 33.29%. With net income at current levels of $211.1M, the consensus growth rate suggests that earnings will decline to $178.3M by 2019. Below is a brief commentary around Walker & Dunlop’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here. See our latest analysis for Walker & Dunlop

Can we expect Walker & Dunlop to keep growing?

The longer term expectations from the 3 analysts of WD is tilted towards the negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

By 2021, WD’s earnings should reach $182.9M, from current levels of $211.1M, resulting in an annual growth rate of -5.66%. EPS reaches $5.55 in the final year of forecast compared to the current $7.03 EPS today. The main reason for WD’s earnings contraction is cost growth exceeding top-line growth of 6.30% in the next three years. With this high cost growth, margins is expected to contract from 30.06% to 21.93% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Walker & Dunlop, there are three pertinent factors you should further examine:

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

• 2. Valuation: What is Walker & Dunlop worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Walker & Dunlop is currently mispriced by the market.

• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Walker & Dunlop? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.