Wd Property
Image source: Walker & Dunlop.

The real estate market has recovered nicely since the housing bust and financial crisis in the late 2000s, and a host of companies have taken full advantage of the new opportunities to profit from real estate. Walker & Dunlop (NYSE:WD) is just one example of a company that has offered financing for residential and commercial real estate in a way that has generated substantial profits for its shareholders, but it has done an exceptionally good job in making the most of its potential.

Coming into Wednesday's third-quarter financial report, Walker & Dunlop investors aren't entirely sure to what extent the real estate company will be able to sustain its past growth, but they are nevertheless hopeful that long-term trends will remain favorable.

Let's look more closely at Walker & Dunlop and see if it is likely to give investors good news in its report this quarter.

Stats on Walker & Dunlop

Analyst EPS Estimate

$0.46

Change From Year-Ago EPS

(2.1%)

Revenue Estimate

$104.98 million

Change From Year-Ago Revenue

7.1%

Earnings Beats in Past 4 Quarters

4

Data source: Yahoo! Finance.

Will investors be happy with Walker & Dunlop earnings?
In recent months, investors have gotten more upbeat about the prospects for Walker & Dunlop earnings, raising their third-quarter estimates by $0.02 per share and giving much more substantial boosts to full-year 2015 and 2016 earnings projections. The stock has continued its impressive rise, with gains of 15% just since late July.

Walker & Dunlop's second-quarter results give a taste of the favorable performance that investors have gotten used to seeing from the real estate finance specialist. Revenue climbed by a third from year-earlier levels to hit a new record, and net income soared by 56%. Big increases in adjusted operating earnings and loan original volumes stemmed largely from the efforts that Walker & Dunlop made to expand its business exposure by offering new products, and CEO Willy Walker characterized the current mortgage refinancing cycle as "unprecedented."

Yet as hard as it might be to believe, Walker & Dunlop sees favorable conditions lasting for a long time to come. The company has observed that commercial mortgage originations hit peak levels in the period from 2005 to 2007, and as a result of their maturity cycle, the majority of those loans will need to be refinanced within the next few years. Walker & Dunlop believes that it has the wherewithal to capture at least its fair share of that business and that could make past gains seem much less impressive by comparison.

Walker & Dunlop has also made efforts to use relationships with other entities where appropriate in order to take advantage of opportunities. One key to the company's growth has been its interactions with government-sponsored enterprises that facilitate real estate lending, as Walker & Dunlop has managed to increase its market share to build on existing billion-dollar loan origination volume. In addition, earlier this year, it decided to double its ownership stake in a commercial mortgage-backed securities partnership with Fortress Investment Group (NYSE:FIG) to 40%, giving it even more exposure to the securitization business.

Given the favorable trends in loan originations, there should be ample chances for Walker & Dunlop to offer commercial mortgage-backed securities to income-hungry investors, and combined with a portfolio that includes mortgage servicing rights and other real estate-related assets, the company is working hard to leave no stone untouched in its search for more profits.

In the Walker & Dunlop financial report, investors will need to look for any commentary about what impact the future direction of interest rates will have on the company's overall strategy. With a broadly diversified portfolio of assets, it has done what it can to protect itself from adverse rate moves. Eventually, ultra-favorable conditions in the real estate financing market will give way to a more sustainable situation going forward. For now, though, investors have to hope that Walker & Dunlop can keep riding the current wave higher and maximize profits while times are good.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Walker & Dunlop. 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.