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Western Alliance (WAL)
NYSE:WAL
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Western Alliance
(NYSE:WAL)
59Neutral
Positive Factors
Growth Prospects
The stock is viewed as offering a compelling risk/reward profile, with expected superior EPS growth and profitability compared to peers.
Mergers and Acquisitions
Risk/reward is seen as positively skewed given capital positioning, superior growth/return potential, potential lift to valuation from a pick-up in bank M&A activity, and a strong management team.
Valuation
The discount valuation looks particularly attractive given the forecast which implies ~18% average annual EPS growth for 2025 and 2026, or nearly twice peer average.
Negative Factors
Interest Rates
Elevated interest rates are likely to remain a concern for stock valuation due to impacts on funding costs and perceived credit risk.
Management Targets
Persistent concerns tied to credit reserves, potential headwinds to management’s loan/deposit growth target, and fading hopes for a mortgage rebound could continue to weigh on investor sentiment.
Western Alliance (WAL) vs. S&P 500 (SPY)
Market Cap
$8.63B
Dividend Yield1.92%
Average Volume (3M)1.28M
Price to Earnings (P/E)10.8
Beta (1Y)1.64
Revenue Growth11.01%
EPS Growth6.63%
CountryUS
Employees3,562
SectorFinancial
Sector Strength84
IndustryBanks - Regional
Share Statistics
EPS (TTM)1.79
Shares Outstanding110,404,260
10 Day Avg. Volume936,951
30 Day Avg. Volume1,277,258
Financial Highlights & Ratios
PEG Ratio3.97
Price to Book (P/B)1.17
Price to Sales (P/S)0.00
P/FCF Ratio-9.40
Enterprise Value/Market Cap0.57
Enterprise Value/Revenue0.38
Enterprise Value/Gross Profit1.19
Enterprise Value/Ebitda1.64
Forecast
1Y Price Target
$93.44Price Target Upside19.60% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Western Alliance Business Overview & Revenue Model
Company DescriptionWestern Alliance Bancorporation (WAL) is a regional bank holding company headquartered in Phoenix, Arizona. The company operates through its primary subsidiary, Western Alliance Bank, providing a wide range of banking and financial services. It serves diverse sectors including commercial real estate, mortgage banking, and small and medium-sized businesses, with a strong focus on personalized service and tailored solutions. The bank offers products such as commercial and industrial loans, real estate loans, and treasury management services, catering to a broad clientele across the United States.
How the Company Makes MoneyWestern Alliance makes money primarily through interest income from its lending activities, which include commercial loans, real estate loans, and consumer loans. The company earns revenue from the interest rate spread between the interest it pays on deposits and the interest it earns on loans. In addition to interest income, Western Alliance generates revenue from non-interest income sources such as fees for treasury management services, deposit account services, and other banking services. The bank also benefits from strategic partnerships and a network of branches that enhance its outreach and customer service capabilities, contributing to its overall revenue growth.
Western Alliance Financial Statement Overview
Summary
Western Alliance demonstrates financial resilience with a strong balance sheet and improving cash flows. However, the income statement raises red flags with missing revenue data for 2024, creating uncertainty about the company's revenue-generating ability. Careful attention to financial reporting and revenue clarity is needed to ensure transparency and accuracy in financial assessments.Income Statement
The income statement shows volatility in revenue and profit margins. The company experienced a drop in total revenue in the latest year, with total revenue at zero for 2024, which is unusual and suggests data inconsistency or reporting issues. The net income for 2024 is higher than in previous years, indicating some level of profitability. However, the absence of revenue figures raises concerns about sustainability.45
Neutral
Balance Sheet
The balance sheet displays a solid equity base with stockholders' equity rising to $6.7 billion in 2024 from $6.1 billion in 2023. The debt-to-equity ratio improved significantly, with total debt dropping to zero, indicating strong balance sheet management. The equity ratio increased, reflecting a stable capital structure. Overall, the balance sheet indicates financial stability with reduced leverage.70
Positive
Cash Flow
Cash flow analysis reveals improvements but also inconsistencies. The operating cash flow turned positive in 2024 after a negative outflow in 2023, showing better cash generation. Free cash flow also improved significantly, swinging from negative to positive. However, the volatility in cash flows over recent years suggests some operational challenges.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.21B | 3.16B | 2.13B | 2.30B | 1.84B | 1.20B | Gross Profit |
| 4.14B | 3.16B | 2.56B | 2.30B | 1.84B | 1.20B | EBIT |
| 971.10M | 953.00M | 865.20M | 1.81B | 1.12B | 622.50M | EBITDA |
| 555.80M | 0.00 | 1.02B | 1.39B | 1.17B | 657.10M | Net Income Common Stockholders |
| 809.40M | 787.70M | 722.40M | 1.06B | 899.20M | 506.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 19.15B | 13.79B | 1.58B | 8.13B | 6.71B | 7.38B | Total Assets |
| 83.04B | 80.93B | 70.86B | 67.73B | 55.98B | 36.46B | Total Debt |
| 0.00 | 6.62B | 8.12B | 7.38B | 2.52B | 633.60M | Net Debt |
| 1.92B | 2.52B | 6.55B | 6.33B | 2.01B | -2.04B | Total Liabilities |
| 75.83B | 74.23B | 64.78B | 62.38B | 51.02B | 33.05B | Stockholders Equity |
| 6.92B | 6.71B | 6.08B | 5.36B | 4.96B | 3.41B |
| Cash Flow | Free Cash Flow | ||||
| -874.80M | 235.90M | -442.90M | 2.10B | -2.72B | 643.40M | Operating Cash Flow |
| -866.90M | 235.90M | -328.60M | 2.25B | -2.65B | 670.20M | Investing Cash Flow |
| -3.40B | -8.88B | -2.16B | -13.13B | -14.71B | -7.54B | Financing Cash Flow |
| 7.73B | 11.23B | 3.02B | 11.41B | 15.21B | 9.10B |
Western Alliance Technical Analysis
Positive
78.13
Price Trends
72.07
Positive
78.93
Negative
81.29
Negative
Market Momentum
2.15
Negative
62.47
Neutral
78.12
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WAL, the sentiment is Positive. The current price of 78.13 is above the 20-day moving average (MA) of 72.37, above the 50-day MA of 72.07, and below the 200-day MA of 81.29, indicating a neutral trend. The MACD of 2.15 indicates Negative momentum. The RSI at 62.47 is Neutral, neither overbought nor oversold. The STOCH value of 78.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WAL.
Western Alliance Risk Analysis
Western Alliance disclosed 41 risk factors in its most recent earnings report. Western Alliance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Western Alliance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.43B | 14.40 | 15.26% | 2.87% | 5.99% | 7.75% | |
78 Outperform | $8.64B | 18.00 | 7.77% | 0.81% | 8.09% | -11.31% | |
75 Outperform | $8.19B | 12.09 | 11.58% | 1.51% | 6.79% | 4.65% | |
75 Outperform | $7.73B | 11.01 | 11.11% | 4.83% | -9.81% | 5.22% | |
73 Outperform | $8.90B | 11.91 | 8.59% | 3.02% | 2.60% | -9.07% | |
64 Neutral | $12.82B | 9.83 | 7.68% | 17000.34% | 12.38% | -5.56% | |
59 Neutral | $8.63B | 10.77 | 12.36% | 1.92% | 11.01% | 6.63% |
* Financial Sector Average
Performance Comparison
WAL
Western Alliance
78.13
14.90
23.56%
CMA
Comerica
58.79
7.98
15.71%
CFR
Cullen/Frost Bankers
131.14
29.55
29.09%
PNFP
Pinnacle Financial Partners
111.36
29.09
35.36%
WBS
Webster Financial
52.90
8.15
18.21%
WTFC
Wintrust Financial
122.30
23.42
23.69%
Western Alliance Earnings Call Summary
Earnings Call Date:Apr 21, 2025
(Q1-2025)
| % Change Since: 21.00%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Positive
Western Alliance Bancorporation reported strong growth in pre-provision net revenue and maintained a solid capital and liquidity position. However, challenges such as a slight decline in net interest margin, an increase in classified assets, and flat noninterest income were noted. Overall, the positives of revenue growth and strong balance sheet management outweigh the negatives.Q1-2025 Updates
Positive Updates
Record Pre-Provision Net Revenue Growth
Western Alliance's pre-provision net revenue reached $278 million, a $31 million or 12% year-over-year increase, driven by a 9% increase in net interest income.
Strong Capital and Liquidity Position
The company maintained a CET1 ratio of 11.1%, with total equity increasing by $508 million. The issuance of REIT preferred equity contributed $293 million, enhancing capital strength.
Loan and Deposit Growth
The balance sheet expanded by $2.1 billion, with HFI loan and deposit growth of $1.1 billion and $3 billion respectively. The company projects $5 billion in loan growth and $8 billion in deposit growth for the full year.
Positive Outlook for Net Interest Income
Net interest income is expected to increase 6% to 8% for 2025, supported by sustained loan growth and expanding net interest margin.
Negative Updates
Decline in Net Interest Margin
The net interest margin slightly declined by 1 basis point to 3.47%, with factors such as rate cuts and pricing pressure affecting yields.
Increase in Classified Assets
Classified assets rose by $186 million, indicating some deterioration in asset quality, though non-accrual loans declined by $25 million.
Flat Noninterest Income
Noninterest income was relatively stable year-over-year at $127 million, with mortgage banking revenue facing a quarterly decline due to lower gain on sale margins.
Company Guidance
During Western Alliance Bancorporation's First Quarter 2025 Earnings Call, the company provided detailed financial guidance for the year. The company expects loan growth to reach $5 billion and deposit growth to reach $8 billion for the full year, supported by strong client engagement and active pipelines. Net interest income is projected to increase by 6% to 8%, driven by sustained loan growth and an expanding net interest margin that is expected to approximate 2024's level. Noninterest income is also anticipated to grow in line with net interest income, reflecting deepening client relationships and enhanced commercial banking fees. The company forecasts noninterest expenses to range between 0% growth and a 5% decline, aided by declining ECR costs resulting from two projected 25 basis point rate cuts before the year's end. Asset quality is anticipated to remain stable, with full-year net charge-offs around 20 basis points, and the effective tax rate for 2025 is expected to be approximately 20%.Western Alliance Corporate Events
Executive/Board ChangesFinancial Disclosures
Western Alliance Reappoints Kenneth Vecchione as CEO
Positive
Apr 21, 2025
Western Alliance Bancorporation announced the reappointment of Kenneth A. Vecchione as President and CEO, effective April 15, 2025, following his temporary medical leave. Dale Gibbons, who served as interim CEO, will continue as Vice Chair and CFO. The company reported solid financial results for the first quarter of 2025, with net income of $199.1 million and earnings per share of $1.79. Despite a decrease in net revenue compared to the previous quarter, the company saw growth in loans and deposits, and maintained strong asset quality and capital levels, positioning it well for future business momentum.
Spark’s Take on WAL Stock
According to Spark, TipRanks’ AI Analyst, WAL is a Neutral.
Western Alliance’s solid balance sheet and attractive valuation contribute positively to its overall stock score. Despite strong earnings guidance and deposit growth, concerns about missing revenue data and technical weaknesses weigh on the score. Investors should monitor financial reporting clarity and technical trends as key factors in future stock performance.
To see Spark’s full report on WAL stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.