Washington Federal (WAFD:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Washington Federal(WAFD:NAS)

Financial Services:Savings & Cooperative Banks

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$27.81 (USD) 26/11/2018

Weighted Valuation
$31.23 (USD)

Overall Rating
Undervalued by 12.3%

Valuation Models Analyst Consensus: $33.00 (USD)
(in order of importance) Adjusted Book Value: $29.51 (USD)
Comparables: $29.36 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (WAFD:NAS USD)

Price 27.81
Range 27.47 – 28.03
52 week 26.73 – 37.35
Open 27.53
Vol / Avg. 289685/377918
Mkt cap 2.27B
P/E 11.59
Div/yield 0.67/0.03
EPS 2.40
Shares 81.58M
Beta 1.15

Company Description

Washington Federal Inc runs more than 200 offices across eight states, primarily in the West. Key states include Washington, Oregon, and Arizona, which account for nearly 80% of loans. Profits are derived mostly from interest sources, as non interest income makes up only about 7% of net revenue. Most of the loan book is oriented toward single-family mortgages, which account for 65% of the portfolio. Multifamily loans account for nearly 11%, and commercial real estate loans for about an additional 8%.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for WAFD:NAS

Using a discounted cash flow model we generated an intrinsic value of $37.64 (USD) for WAFD:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

WAFD:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $37.64 1% 5% 1% 5%
WACC (or Ke) 9.85 $44.14 $32.79
Terminal Growth Rate 3.00 $33.36 $43.37
Tax Rate 0.21 $40.11 $35.16
Cash Flow 324,034,473 $35.54 $39.73
Capital Expenditures -29,856,000 $37.46 $37.81
Long Term Debt 0 $37.64 $37.64

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $29.36 (USD) for WAFD:NAS. We also generated a valuation of $33.27 (USD) using other metrics and comparables.
The comparable companies were Capitol Federal Financial (CFFN:NAS), HomeStreet (HMST:NAS), Kearny Financial (KRNY:NAS), OceanFirst Financial (OCFC:NAS) and United Financial Bancorp (UBNK:NAS).

Company WAFD:NAS End Date Value
Earnings/Share $2.40 (USD)
Book Value/Share $24.01 (USD)
Sales/Share $5.96 (USD)
Cash Flow/Share $2.29 (USD)
EBITDA/Share $4.61 (USD)
Price Based on Comps Adjustment Factor (%)
$56.83 (USD) -37.2
$27.04 (USD) 7.5
$29.73 (USD) 33.6
($0.60) (USD) -51.6
$0.00 (USD) 0.0
WAFD:NAS Ratios Used Average Values CFFN:NAS HMST:NAS KRNY:NAS OCFC:NAS UBNK:NAS
12.24 PE Ratio 23.68 16.77 11.44 53.92 22.21 14.05
1.17 PB Ratio 1.13 1.31 0.99 1.00 1.21 1.12
4.73 PS Ratio 4.99 7.57 1.44 7.95 4.31 3.69
12.29 PCF Ratio 11.69 14.09 3.43 23.71 12.03 5.17
0.00 EV to EBITDA 0.00 0.00 0.00 0.00 0.00 0.00

Multiples

Using a multiples approach we generated a valuation of  $38.08 (USD) for WAFD:NAS

Company WAFD:NAS End Date Value
Earnings/Share $2.40 (USD)
Book Value/Share $24.01 (USD)
Sales/Share $5.96 (USD)
Cash Flow/Share $2.29 (USD)
EBITDA/Share $4.61 (USD)
Price Based on Comps Adjustment Factor
$35.99 (USD) 0
$30.23 (USD) 0
$32.10 (USD) 0
$33.97 (USD) 0
$58.14 (USD) 0
Ratios Ratio Average
PE Ratio 14.99
PB Ratio 1.26
PS Ratio 5.39
PCF Ratio 14.83
EV to EBITDA 12.62

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  WAFD:NAS for the last 10 years was  1.22

We ran the Adjusted Book Value for  WAFD:NAS and generated a book value of  $24.14 (USD)
By multiplying these we get an adjusted valuation of  $29.51 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for WAFD:NAS. The 1 analysts have a concensus valuation for WAFD:NAS for 2019 of $33.00 (USD).

WAFD:NAS Washington Federal

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 2 0 3.0000 Hold 2018-11-23

Current Price: 27.81 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 2.60 2.80
# EPS Analysts 2 1
Mean Revenue 547.00 569.50
# Revenue Analysts 1 1
Mean Target Price 33.00
Mean Cash Flow
Mean EBITDA
Mean Net Income 215.00 228.30
Mean Debt Outstanding
Mean Tax Rate 21.00 21.00
Mean Growth Rate 7.00
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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