WAFD, INC. (WAFD): what the price requires
At today's price, WAFD, INC. (WAFD) is priced for 10.4% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/WAFD
Headline
| Field | Value |
|---|---|
| Ticker | WAFD |
| Company | WAFD, INC. |
| Current price | $38.25/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 10.4% |
| Return on equity now | 7.7% |
| ROE gap | +2.7pp |
| Price-to-book | 1.05x |
Solve inputs: computed at a 10.1% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.39σ |
| cohort percentile (of 119 peers) | 13 |
| sustained it ~10 years at this level | 75% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.06x | 3 | expensive |
| Earnings | 0.77x | 2 | justifies |
| Relative | 0.75x | 3 | justifies |
| Growth | 1.15x | 3 | expensive |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.8%); the inversion above states its own rate.
Per-Model Detail (n=11)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $25.17 | 1.52x | yes | TBVPS $33.55 × 0.75x (ROE (TTM) 8.5% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.01% allowance/loans → ×0.92) |
| Relative Valuation | Relative | $34.50 | 1.11x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.6x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | $146.95 | 0.26x | yes | DPS $1.07, g=8.5% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $33.32 | 1.15x | yes | Stage 1: 17% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $36.09 | 1.06x | yes | BV/sh $39.45, ROE (TTM) 8.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $34.51 | 1.11x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $25.72 | 1.49x | yes | Rev $0.7B, growth 3% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 4.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $51.12 | 0.75x | yes | EPS $3.05, growth 17% (input: historical EPS growth), PEG=0.68 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $52.03 | 0.74x | yes | √(22.5 × EPS $3.05 × BVPS $39.45) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $98.41 | 0.39x | yes | EPS $3.05 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $76.68 | 0.50x | yes | EPS $3.05 × (PEG 1.5 × growth 16.8% (input: historical EPS growth)) → PE 25.1x |
| Earnings Yield | Earnings | $32.97 | 1.16x | yes | EPS $3.05 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 3.7% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- WaFd is a Pacific Northwest savings bank that competes on low operating costs and balance-sheet management; it aims to grow net interest income "through the rate cycles" rather than chase loan volume.
- The defining question is the return on equity: the price near book value assumes the bank sustains a roughly 10% return on its capital, above the about 8% on trailing earnings it has recently earned.
- What to watch is the margin and credit trend: net interest margin improved to about 2.81% in the latest quarter and non-performing assets fell to about 0.48% of total assets.
Bull Case
Valuing a bank means starting with the return on its capital, not an earnings multiple, and WaFd's case is that its return is inflecting upward from a low base. The bank has recently earned a return on equity in the high single digits, and the price near book value assumes it sustains roughly 10%. The most recent quarter shows the path: net income rose about 17% year over year, and the net interest margin expanded to about 2.81%, helped by higher asset yields and lower funding costs. For a bank, margin expansion in a falling-rate environment is the lever that drives the return on equity toward the level the price assumes.
The franchise is built for exactly this kind of disciplined recovery. WaFd describes its edge as managing the balance sheet "through different rate cycles," noting that its low operating costs have "allowed the Company to manage interest rate risk, within guidelines established by the Board, through all interest rate cycles." A low-cost, conservatively run thrift does not need spectacular loan growth to create value; it needs a stable deposit base, a sensible margin, and clean credit, and on the most recent evidence it has all three. The bank actively reshaped its balance sheet after the Luther Burbank acquisition, selling lower-yielding multifamily and single-family loans and using the proceeds to reduce borrowings, a deliberate move to lift the margin and the return on capital.
Credit quality and capital return seal the bull case. Asset quality strengthened in the latest quarter, with non-performing assets falling to about 0.48% of total assets, net charge-offs minimal, and the allowance for credit losses covering well over 150% of non-performing loans, a cushion that means a credit shock would have to be severe to dent capital. Management is returning that capital to shareholders, repurchasing about 3.6% of the shares in a single quarter while maintaining the dividend. At roughly one times book and below the peer group's price-to-book, a bank buying back this much stock at this valuation is compounding book value per share for the owners who stay.
Bear Case
The advantage a low-cost thrift relies on, a cheap and sticky deposit base, is exactly what the modern banking landscape erodes. Depositors now move money at the tap of a phone, and online banks and money-market funds pay rates a branch-based savings bank struggles to match without crushing its own margin. WaFd's net interest margin near 2.81% is recovering but remains thin in absolute terms, well below what a commercial-heavy bank earns, because the deposit franchise has to compete on price for funding it once captured cheaply. The bull case assumes the bank can hold its funding costs down as it grows; the bear case is that holding deposits increasingly means paying up for them, which caps how high the return on equity can climb.
The asset side carries the concentration risk common to thrifts: real estate. WaFd's loan book is weighted toward mortgage and real-estate lending, including the multifamily exposure it inherited and has been actively trimming, and a downturn in Pacific Northwest property values or a rise in commercial-real-estate stress would flow through credit costs. The 10-K is methodical about the mechanics, noting that the bank "does not accrue interest on loans 90 days past due or more" and that non-performing assets are measured against total assets. Credit looks pristine today, but it is a lagging indicator: the cycle reveals problem loans after the economy turns, not before.
The return gap is the bear's arithmetic. The price assumes a roughly 10% return on equity, while the bank has recently earned about 8% on trailing earnings. That is the central bet: the margin recovery and balance-sheet repositioning have to lift the return by two-plus points and keep it there. If the recovery stalls, or deposit competition compresses the margin again, the return stays in the high single digits, and a bank earning below its cost of equity does not deserve to trade at book. The static value methods anchor at or just above book value near $39 per share, but the price-to-book justification rests entirely on the return reaching the assumed level. History is a caution: only about three-quarters of banks earning this return sustained it for a decade, and WaFd has not yet shown it can hold the higher number through a full cycle.
Valuation
A bank is worth the return it earns on its capital, so WaFd is read off price-to-book, not an operating multiple. At about $37 (June 28, 2026) the stock trades near one times book, which inverts to an assumed sustainable return on equity of roughly 10%, against the about 8% on trailing earnings the bank has recently earned. The gap between the assumed and the demonstrated return is the entire bet. The assumed level is within reach of what WaFd has earned in better periods, and the most recent quarter, with the margin expanding, points in the right direction, but the price requires the improvement to stick.
The methods we use to triangulate cluster around book value, which is the signature of a bank priced for a modest return. The excess-return methods, which capitalize the return earned above the cost of equity, land right at the price near $34 to $36. The book-value-based fair value, applying a price-to-tangible-book multiple driven by the return on equity, lands below the price near $25, reflecting that the trailing return sits below the cost of equity. The relative-multiple lens at a sector-typical earnings multiple lands near the price. A few methods reach higher, but they assume the higher growth and return the bank has yet to prove. The pattern is a value-and-recovery bank: priced near book, with the upside resting on the return on equity climbing to the assumed 10% and holding. The peer cohort here, regional and community banks like Commerce Bancshares and Trustmark, sits in the same price-to-book range, and WaFd trades in the lower half of that group.
For a bank the balance-sheet frame is capital-return capacity, not coverage math. WaFd is well capitalized, generating enough capital to repurchase about 3.6% of its shares in a quarter while holding the dividend, and its allowance for credit losses covers non-performing loans comfortably. The downside is bounded by tangible book value and a clean credit book; the risk is that the return on equity, not the solvency, is what the price has paid for, and a stalled margin recovery leaves the stock fairly valued at book rather than cheap.
Catalysts
WaFd's most recent quarter showed the profitability recovery taking hold. The bank reported net income of about $65.5 million, up about 17% year over year, with earnings per share of about $0.83 that beat expectations, as net interest income rose to about $178 million and the net interest margin improved to about 2.81% on higher asset yields and lower funding costs. Credit held up well, with non-performing assets at about 0.48% of total assets, minimal net charge-offs, and the allowance for credit losses covering about 163% of non-performing loans.
Capital return is the steadiest catalyst. The bank repurchased about 2.74 million shares, roughly 3.6% of its common stock, in the quarter and maintained its quarterly dividend of $0.27 per share, the combination that compounds book value per share for continuing holders. The watch items are whether the net interest margin keeps expanding as funding costs ease, whether deposit competition forces the bank to pay up, and whether credit stays clean through the real-estate cycle, the three variables that decide whether the return on equity climbs to the level the price assumes.
Peer Cohorts (Per Segment, With Filing Citations)
WaFd (single reportable segment - banking) (reported)
- CFR (Cullen/Frost Bankers, Inc.)
- (no filing in the citation store)
- TRMK (Trustmark Corporation)
- (no filing in the citation store)
- FHB (FIRST HAWAIIAN, INC.)
- (no filing in the citation store)
- UCB (UNITED COMMUNITY BANKS INC)
- (no filing in the citation store)
- FNB (FNB CORP/PA/)
- (no filing in the citation store)
- ABCB (Ameris Bancorp)
- (no filing in the citation store)
- PB (PROSPERITY BANCSHARES, INC.)
- (no filing in the citation store)
- CBU (COMMUNITY FINANCIAL SYSTEM, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q2 FY2026 earnings release, 2026