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 Walter Investment Management (NYSE:WAC) have gained roughly 17% today after the business solutions specialist came through with a huge beat on its first-quarter earnings and full-year guidance.
So what: Walter's revenue rose 18% year over year to $369.9 million for the quarter, which was weaker than Wall Street's $379.8 million consensus estimate. However, Walter's adjusted earnings of $1.53 per share were far better than the Street's expectation for $0.96 in EPS, even though a Briefing report on the company's earnings warned that this figure "may not be comparable" to analysts' estimates. Walter's generally accepted accounting principles net income dropped from $0.73 per share a year ago to just $0.45 per share today, primarily due to changes in the fair value of servicing rights. Core earnings (essentially the same as adjusted earnings) of $1.53 per share were similar to the year-ago quarter's core EPS of $1.57.
Walter maintained its full-year EPS guidance range of $5.65 to $6.25. At its midpoint ($5.95), this represents a solid 14% beat of Wall Street's full-year EPS estimate of $5.21.
Now what: Walter generated a lot of core earnings in 2013, as it reported adjusted EPS of $9.63 per share in its fourth-quarter report earlier this year. Still, $5.95 in EPS puts Walter's adjusted forward P/E at just 4.8, even after today's pop. Walter shareholders did not enjoy 2013, as the stock lost roughly a quarter of its value last year and were heading far lower this year before today's pop. This is undoubtedly good news, but it may take a bit more digging to determine whether this rebound will hold up, or if it'll prove as short-lived as the pop that took place last summer.
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Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.