Q3 Earnings Preview for Western Alliance (NYSE:WAL)

in EARNINGS/INVESTING IDEAS by

Western Alliance Bancorporation (NYSE:WAL) is scheduled to report Q3 earnings results after markets close for trading on October 22, 2020.

The company is expected to report earnings of $1.04/share on revenue of $312.2 million. The consensus earnings per share (EPS) of $1.04/share is based on a poll of 11 analysts and represents a decline in eps of −15.9% over the same quarter last year, when the company reported earnings of $1.24/share.

The revenue forecast of $312.2 million based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 8.1%. Last year the company reported $288.9 million in revenue for the quarter.

Expected to report EPS contraction of −15.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $312.24 $288.91 8.1%
EPS $1.04 $1.24 −15.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Western Alliance Bancorporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.76 $0.85 11.4% Beat
Q1, 2020 $1.11 $0.90 −18.5% Missed
Q4, 2019 $1.21 $1.25 2.6% Beat
Q3, 2019 $1.19 $1.24 4.3% Beat
Q2, 2019 $1.16 $1.18 1.5% Beat
Q1, 2019 $1.09 $1.13 4.2% Beat
Q4, 2018 $1.07 $1.14 6.6% Beat
Q3, 2018 $1.03 $1.04 0.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −2.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 16, 2020 $37.03 $36.26 −2.1% Decline
April 16, 2020 $29.66 $30.99 4.5% Increase
January 23, 2020 $57.25 $57.49 0.4% Increase
October 17, 2019 $45.72 $48.01 5.0% Increase

Fundamentals And Technical Analysis

Western Alliance Bancorporation is currently trading at $37.02/share, down −1.3% for the day. The company is trading at approximately 62.8% of its 52-week high of $58.94/share. The company’s stock price is up 2.1% since the last earnings report and down −0.9% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 57.50 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WAL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 8.55 and a forward P/E multiple of 9.56.

Western Alliance Bancorporation’s current share price also implies a price-to-book (P/B) multiple of 1.19. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $37.02
P/E Ratio 8.5x
P/E Ratio (Fwd) 9.6x
PEG Ratio −1.5
Total Debt / Total Capital 18.1%
Levered Free Cash Flow $625.2 million
Price To Sales 3.6x

Finbox

Western Alliance Bancorporation is a mid-cap stock with a market capitalization of $3.697 billion. The company operates in the Financials sector and the Banks industry.

Western Alliance Bancorporation operates as the holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. The company offers deposit products, including checking accounts, savings accounts, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts. It also offers commercial and industrial loan products, such as working capital lines of credit, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as Internet banking, wire transfers, electronic bill payment and presentment, lock box services, courier, and cash management services. Further, it holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. As of December 31, 2018, the company operated 38 branch locations and 11 loan production offices. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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