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 Walker & Dunlop (WD -1.02%) were tumbling today, down as much as 20% after it lowered its loan origination guidance for the current quarter.
So what: The commercial real estate lender dropped its loan origination forecast to $1.7-$1.9 billion from a previous range of $2.0-$2.5 billion, blaming rising interest rates and caps on loans that Fannie Mae and Freddie Mac can hold. Walker & Dunlop sells about half of its loans to Fannie & Freddie. Year-to-date loan originations are still projected to be up 43-48% from a year ago, however. Separately, the company also entered into a $150-$200 million term loan today.
Now what: Today's drop was the second such decline for Walker & Dunlop in just two months; shares dropped 15% on August 8 after the company delivered a disappointing earnings report. In fact, Walker & Dunlop has badly missed earnings estimates in its last three quarters, generally a red flag for stocks. Shares are down 40% in that time, and show no sign of rebounding after today's update. The stock may seem cheap at a P/E around 8, but I'd like to see conditions improve before getting on board.
