The real estate market has been healthy for years, and Walker & Dunlop (NYSE:WD) hasn't hesitated to make hay while the sun is shining. Even though some market participants have become more nervous about the future direction of real estate, the Federal Reserve's recent reversal in monetary policy to cut rates has been a potential encouragement for those hoping to see more activity in the real estate market.

Coming into Wednesday's second-quarter financial report, Walker & Dunlop investors believed that the company would be able to see reasonable gains in both revenue and earnings. Walker & Dunlop's numbers were even better than most had expected, and the company appears to be positioned to keep prospering in the current real estate environment.

A nice bump for Walker & Dunlop

Walker & Dunlop's second-quarter results once again dramatically outpaced what analysts were expecting to see. Revenue was higher by 12% to $200.3 million, doubling the pace of top-line growth that most of those following the stock had projected. Net income moved higher by 3% to $42.2 million, and the resulting earnings of $1.33 per share topped the consensus forecast among investors for $1.29 per share on the bottom line.

Five properties pictured above the Walker & Dunlop logo and contact info.

Image source: Walker & Dunlop.

Real estate didn't slow down one bit as far as Walker & Dunlop was concerned. Total transaction volume of $7.31 billion was 18% higher than the year-ago level, with the biggest gains coming from its Freddie Mac portfolio of loans, as well as its brokered mortgage loan segment. Declines in Ginnie Mae loan volume weighed on overall results somewhat, but Walker & Dunlop also got a modest contribution from growth in its Fannie Mae portfolio. Property sales volumes more than doubled from their levels a year ago, coming in above $1.1 billion. Commercial and multifamily residential real estate markets remain strong, and that's increased demand for debt financing.

Walker & Dunlop's mortgage servicing portfolio also saw robust gains. The size of the total portfolio grew 16% to $89.9 billion, with the largest gains coming from the brokered loan segment. Healthy upticks in business from Fannie Mae, Freddie Mac, and Ginnie Mae loans also contributed to the segment's strength. Low rates are unlikely to spur a whole lot of additional refinancing activity, and that's helping to keep servicing-related assets on the books longer.

Mortgage banking segment revenue rose just 5%, though, as losses associated with mortgage servicing rights transactions offset a 19% rise in mortgage origination fees. Servicing fee revenue was up 7% year over year, and small contributors like escrow earnings, broker fees, and the catch-all other revenue category helped boost Walker & Dunlop's bottom line.

What's ahead for Walker & Dunlop?

CEO Willy Walker likes what he's seeing in the industry. "The current macroeconomic environment, with low interest rates and limited inflationary pressures," Walker said, "is an extremely positive backdrop for our business that should continue to benefit asset owners and attract large amounts of capital into commercial real estate." The CEO also noted that the company hiring new mortgage bankers and property sales brokers has also added to transaction volumes.

Walker & Dunlop also made a move to show more confidence in its stock, although it was a small one. The real estate financier used a small portion of its authorization to repurchase stock, buying 30,000 shares and spending a bit more than $1.5 million to do so. That still leaves $48.5 million in authorized repurchases for future moves.

Investors didn't necessarily respond in line with the results, as shares were down 3% around noon following the announcement on a bad day for the stock market more broadly. There's a lot of uncertainty about the likely future course of the overall economy and the real estate sector in particular. But Walker & Dunlop is doing what it can to take advantage of good conditions while they last, while also putting itself in position to deal with tougher times when they inevitably come.

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