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Walker & Dunlop Crashes on Lowered Guidance

Walker & Dunlop (NYSE: WD  ) investors are running for the hills today after the company lowered guidance on loan volume for the quarter.

Walker & Dunlop is a commercial real estate lender that focuses on multifamily properties, such as apartment buildings. Walker & Dunlop makes the loans to developers of multifamily dwellings, then sells those loans to Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac are fast approaching the cap in the number of loans they can take on, which has a direct impact on the number of loans Walker & Dunlop can sell. As a result, the company lowered guidance for third-quarter loan originations by a solid 20%, which has spooked investors.

Motley Fool analyst David Hanson believes this stock is trading relatively cheaply, at around 11 times earnings. Despite the headwinds from Fannie Mae and Freddie Mac, David thinks the long-term outlook for this stock is a positive one, as the family-run company has survived through three generations; its current CEO is Willy Walker, grandson of the co-founder.

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9/26/2016 4:02 PM
WD $25.11 Down -0.84 -3.24%
Walker and Dunlop CAPS Rating: *****