Why Washington Federal Shares Flew

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of financial holding company Washington Federal (NASDAQ: WAFD  ) climbed as high as 10% today after its quarterly results topped Wall Street expectations. 

So what: The stock has spiked recently on strong earnings momentum, and today's third-quarter beat -- EPS of $0.36 versus the consensus of $0.33 -- only reinforces that trend. While net-interest income slipped 1.9% over the year-ago period, to $94.7 million, net interest margin increased 10 basis points, to 3.15%, giving analysts plenty of good vibes over its profitability going forward.

Now what: When you couple the company's trend of improving asset quality with the still-favorable interest rate environment, I'd expect the operating momentum to continue. "Loan demand has strengthened and if current conditions persist, the prospect of improved loan growth will become more likely," said Chairman and CEO Roy Whitehead. Of course, with the stock now up about 35% over the past three months alone, and trading at a not-so-cheapish P/E of 16, much of that bullishness might already be baked into the stock.    

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