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Here's Why Walker & Dunlop Stock Soared on Thursday

By Matthew Frankel, CFP® – Oct 29, 2020 at 8:56PM

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The company gave investors some excellent results -- here's what they were.

What happened

The stock market was rebounding strongly on Thursday, a welcome change following one of the worst declines since the COVID-19 pandemic started. But commercial real estate finance company Walker & Dunlop (WD 1.89%) was having an especially great day. As of 2:50 p.m. EDT, the real estate financial stock was up by 11.5%, handily outpacing the overall market.

So what

Walker & Dunlop reported its third-quarter earnings on Thursday morning. To put it mildly, investors were pleased with the results.

High-rise apartment buildings.

Image source: Getty Images.

On the headline numbers, the company reported $247 million in revenue, which was 16% higher than a year ago. Earnings came in at $1.66 per share, which represents 19% year-over-year growth.

Impressively, this growth came at a time when overall transaction volume actually declined by 6% from the same quarter in 2019. Growth was fueled by the mortgage-servicing portfolio, which now is $103.4 billion in size (13% larger than a year ago), as well as by much higher agency-backed loan-origination volumes, which come with higher origination fees and helped loan-origination and debt-brokerage fee income grow by 29%.

Now what

A notable accomplishment is that Walker & Dunlop was able to accomplish its year-end 2020 goals (which it set in 2015) ahead of schedule, despite the COVID-19 pandemic. The company has more than doubled the size of its mortgage-servicing portfolio over those five years, grown annual origination volume from $16 billion to more than $30 billion, and nearly doubled annual revenue. And if the company keeps doing what it's doing, it could produce similar results over the next five years, as well.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walker & Dunlop. The Motley Fool has a disclosure policy.

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