WaFd (WAFD) Could Be 13% Undervalued After The EverBank Reverse Merger

WaFd (WAFD) moved into the spotlight after EverBank Financial Corp agreed to a US$3.7b reverse merger that will leave WaFd as the surviving holding company under the EverBank Financial Corp name.

Recent trading shows mixed momentum for WaFd, with the share price down about 10.4% over the past month and 8% over the last quarter, even as the year to date share price return is 6.13% and the 3 year total shareholder return is 40.77%. This suggests long term holders have still seen solid gains despite the merger related pullback.

Scan how other regional banks are responding to the same merger and consolidation pressures by reviewing our curated list of solid balance sheet and fundamentals (23 results).

WaFd has handed recent buyers a pullback while longer term holders still sit on sizeable gains. The next thing to test is simple. Does the current valuation leave most of the upside already cashed in, or not yet?

Most Popular Narrative: 12.6% Undervalued

WaFd's most followed valuation storyline pegs fair value at $39, which sits above the last close of $34.10 and frames the merger pullback as a potential gap.

The Build 2030 shift toward true commercial banking and small business relationships, including reorganized business, corporate and commercial real estate banking teams, positions WaFd to grow higher yielding C&I and CRE loans, supporting faster revenue and earnings growth.

Read the complete narrative. Read the complete narrative.

Want to see what sits behind that fair value call for WaFd? The narrative leans heavily on measured loan growth, steadier margins and a future earnings multiple that assumes investors stay interested in the story.

Result: Fair Value of $39 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, this storyline can crack if credit costs climb faster than expected or if the Build 2030 loan mix shift does not materialize as planned.

Find out about the key risks to this WaFd narrative.

Another View: WaFd Through Cash Flows

The story looks different when shifting from fair value narratives to the SWS DCF model. On that framework, WaFd at $34.10 is almost exactly in line with an estimated future cash flow value of $34.05, which points to a stock that already reflects much of its forecasted progress. If cash flows are fairly priced, how much weight do you put on the merger and Build 2030 upside story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out WaFd for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 33 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Sentiment on WaFd is mixed, so do not wait for the crowd to settle before forming your own take based on the data. To see what optimistic investors are focusing on, review the 4 key rewards.

Looking for more investment ideas beyond WaFd?

If WaFd has your attention, do not stop there. Broader context across other opportunities can sharpen your judgment and keep your portfolio thinking fresh.

• Target stability across market cycles by reviewing 11 resilient stocks with low risk scores that aim to limit downside while still participating when conditions improve.
• Spot potential value gaps early by scanning the 18 high quality undiscovered gems that many investors may not be watching yet.
• Turn dependable cash flows into a clearer plan for income by filtering for 6 dividend fortresses that could strengthen your payout stream.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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