Shares of Walker & Dunlop (NYSE:WD) surged 16.1% in February, according to data from S&P Global Market Intelligence, after the real estate loan originator produced better-than-expected fourth-quarter results and provided an optimistic outlook for 2019.
Walker & Dunlop originates, sells, and services a range of multifamily and commercial real estate loans for owners and developers. The company's stock was under pressure for much of 2018 because of investor fears about the health of the real estate market, but its fourth-quarter results went a long way toward calming those concerns.
The company reported earnings of $1.44 per share on revenue of $214.9 million, easily outpacing consensus estimates for $1.36 per share in earnings on $204.2 million in sales. Walker & Dunlop management gave no indication it was anticipating a slowdown, increasing the quarterly dividend by 20% to $0.30 per share, and authorized a $50 million share repurchase program.
For the year, Walker & Dunlop recorded total transaction volume of $28 billion and revenue of $725 million. The company earned $5.04 per share, up 6% over 2017.
Company Chairman and CEO Will Walker on a call with investors said Walker & Dunlop is well on its way to hitting the goals set out in its "Vision 2020" growth plan that includes $1 billion in annual revenue, a servicing portfolio of more than $100 billion, and $30 billion in annual loan originations.
The outlook for real estate today looks a lot better than it did through much of 2018, with interest rates stabilizing and the Federal Reserve seemingly content to let any further increases play out slowly. That's good news for Walker & Dunlop.
Perhaps more importantly, Walker & Dunlop appears to have the balance sheet and business strength to survive an eventual downturn. And management has enough confidence in its business to focus on returning cash to shareholders. Walker & Dunlop appears to be well on its way to hitting its 2020 goals.