WAMU (WM) Message Board - Msg: 16267862

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : WAMU (WM)

WM 199.77

-0.4%

Oct 31 9:30 AM EDT

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: opalapril who wrote (110)	8/28/2001 7:40:19 AM
From: W D J Moore	Read Replies (1) of 116

Recent comment from Briefing.com, any thoughts? Washington Mutual (WM) 41.95 +0.15: With the Nasdaq threatening to revisit the 1700's, investors will continue to seek investment opportunities outside the technology sector. One approach is to find businesses with clean operating results in addition to a clean chart. A quick look at the one-year chart on Washington Mutual shows that it fits the technical description which makes it a good bet the fundamentals are under it as well. The shares are getting a small lift today thanks in part to Morgan Stanley which raised its target price to $52 from $43 in addition to bringing up fiscal year 2002 estimates. The company has been growing through acquisition over the past several years but is also generating organic growth in the area of 15%. Though it may not be widely followed as an investment, Washington Mutual isn't exactly what you would call a small cap. With a market cap of $36.8 billion, WM just edges out Ford Motor Company's (F) recently deflated $36.4 billion cap. Many investors have expressed concern that the end of the monetary easing cycle could signal trouble for financials. There are two responses to this issue: 1) it's beginning to look like there might be as many as two additional rate cuts in the current cycle and 2) when the easing cycle does come to an end, the subsequent tightening cycle isn't likely to begin anytime soon. With trailing earnings of $2.88, the shares currently carry a Price/Earnings multiple of 14.5x. To put the current valuation in context, WM trades at a deep discount to the S&P 500 yet has a growth rate well in excess of the index. On the basis of historic comparisons, WM currently trades in the middle of its valuation range -- the five-year valuation bands range from a high of 32x in 1997 to a low of 6x last year. The forward earnings estimate for WM is $3.94 -- assuming multiple expansion to 18x trailing earnings (still a discount to the S&P 500 unless the index would come down to meet it), that would factor to a share price just under $71. It's also worth noting WM has averaged a 7% surprise over the consensus estimate for the prior four quarters. If the multiple remains in the area of 14.5x earnings and WM hits its estimates for 2002, the shares would trade at $57 per share for a paltry 36% gain. There is always some element of uncertainty with any investment but we believe the risk/reward dynamics on WM look favorable relative to the broader market.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next