Is WaFd Bank (WAFD) a Buy Ahead of Q4 2025 Earnings Amid Missed Estimates and Strategic Momentum?

The recent earnings performance of WaFd Bank (WAFD) has sparked a nuanced debate among investors. While the bank's Q4 2025 results fell short of expectations, its long-term strategic initiatives and valuation metrics suggest a complex picture. This analysis examines whether WAFD is a compelling buy, focusing on earnings momentum and valuation alignment with industry benchmarks.

Earnings Momentum: A Mixed Signal

WaFd Bank reported Q4 2025 earnings of $0.72 per share, missing the consensus estimate of $0.77 by 6.49%. Revenue also lagged, coming in at $188.3 million versus the projected $191.04 million. These results reflect operational headwinds, including an efficiency ratio of 56.8%, which exceeded the two-analyst average estimate of 55.5%. Such a miss raises concerns about cost management and asset quality in a challenging economic environment.

However, annual performance tells a different story. For fiscal 2025, WAFD's earnings surged by 13% to $226.068 million, outpacing its 2024 results. This growth, coupled with the bank's "Build 2030" strategic plan- aiming to boost non-interest-bearing deposits from 12% to 20% and expand its active loan portfolio by 8–12%-suggests a long-term value proposition. The plan's focus on deposit growth and loan expansion could mitigate near-term volatility and drive sustainable earnings in the medium term.

Valuation Alignment: Undervaluation or Caution?

WAFD's valuation metrics appear to diverge from its earnings performance. As of December 2025, the bank's price-to-earnings (P/E) ratio stood at 11.7x, below both the peer average of 13.9x and the U.S. Banks industry average of 11.8x. This implies a potential undervaluation relative to its peers, particularly when compared to institutions like Simply Good Foods (20.6x) and Riverview Bancorp (22.8x). The decline in WAFD's P/E from 14.5 in 2024 to 12.2 in early 2026 further underscores a market recalibration.

The price-to-book (P/B) ratio for U.S. banks in December 2025 averaged 1.14 for regional banks and 1.62 for money center banks. While WAFD's specific P/B ratio is not disclosed, its valuation appears to align with the lower end of this spectrum, suggesting a conservative pricing relative to tangible book value. However, the absence of a clear P/E-to-growth (PEG) ratio complicates a full assessment. Using industry data, the U.S. Banks sector traded at a 14.3x P/E with 8.7% annual earnings growth, yielding a PEG ratio of approximately 1.64. A PEG ratio above 1 typically signals overvaluation, but WAFD's lower P/E and robust earnings growth could position it as a more attractive opportunity.

Analyst Revisions and Forward-Looking Outlook

Post-Q4 results, analyst estimates for WAFD's next quarter have seen a modest downward revision of 1.34% over 30 days. This trend reflects lingering skepticism about the bank's ability to sustain its earnings momentum. Yet, the consensus EPS estimate for Q1 2026 remains at $0.76, with revenue expectations of $193.53 million. These projections, while cautious, suggest a baseline of stability.

The bank's upcoming Q1 2026 earnings release on January 15, 2026, will be critical. A rebound in performance or further evidence of strategic execution could catalyze a re-rating of its shares. Conversely, a continuation of underperformance might deepen the discount.

Strategic Momentum: A Long-Term Catalyst

WAFD's "Build 2030" plan is a pivotal differentiator. By targeting higher non-interest-bearing deposits and loan growth, the bank is positioning itself to capitalize on interest rate normalization and evolving customer preferences. These initiatives, if executed effectively, could enhance net interest margins and diversify revenue streams. For investors with a multi-year horizon, the strategic upside may outweigh near-term volatility.

Conclusion: A Calculated Buy?

WaFd Bank presents a paradox: a near-term earnings miss juxtaposed with a compelling long-term strategy and undervaluation relative to peers. The 13% annual earnings growth and strategic focus on deposit and loan expansion provide a foundation for future momentum. However, the recent efficiency ratio concerns and downward estimate revisions warrant caution.

For investors, the decision hinges on risk tolerance. Those who prioritize short-term performance may find WAFD's current valuation insufficiently justified. Yet, for those who can stomach near-term volatility and believe in the "Build 2030" vision, WAFD's discounted valuation and strategic momentum could offer an attractive entry point. The upcoming Q1 2026 earnings report will be a litmus test for the bank's ability to regain momentum and validate its long-term potential.