Walter Investment Management Corp (WAC): Don’t Worry About This Company’s Astronomical P/E

As it is, Walter compares well to its peers. But Vice President Denmar John Dixon hinted at something even better, saying, “Remember, this guidance is based on only portfolios we’ve already acquired and it doesn’t include an assumption for any new business we might add.”

In other words, the company’s forward P/E of 5 only reflects current business. Assuming that no new business happens, and assuming no one defaults, we should expect earnings to live up to the guidance of $5.06/share in 2013. Given the number of people who want to take advantage of low interest rates, and who are eligible because of the HARP program, it is very likely that Walter will grow the business even more than it is letting on.

Conclusion

Short-term sell-offs are a value investor’s dream come true. This 32% drop looks like the perfect time to get into Walter Investment Management Corp (NYSE:WAC) — a company with a lot of growth ahead. Investors will definitely want to keep an eye on legislature like the HARP program, as a change in politics can affect this sector. Also keep an eye on jobs, since Walter works mainly with “risky” loans. But all-in-all, Walter’s opportunities seem to far outweigh the risks.

The article Don’t Worry About This Company’s Astronomical P/E originally appeared on Fool.com and is written by Jon Quast.

Jon Quast has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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