CFA Institute Research Challenge

Abstract

As a group of finance students, we were tasked with valuing Western Alliance Bancorporation for the CFA Institute Research Challenge. The competition required us to submit an analyst report detailing our research and findings about the company. Through our research and analysis, we found a stock price of $41.36, which was below their trading price, which resulted in a "sell" decision for Western Alliance Bancorporation (WAL: NYSE). Using a combination of background research on the company, industry and financial analysis and valuation techniques. Western Alliance Bancorporation is a smaller regional bank that with the current market environment for banks, the current political instability and the competitive nature of the banking industry was determined to not be outperforming and carries a lot of risk. When looking at their financials, we determined that they had a fairly small market capitalization and was trading at high multiples for the industry. Using several valuation techniques and building the model, looking at historical pricing and residuals we came to the sell decision. Ultimately, we were able to submit our analyst report, but were not chosen to continue on to the local competition. This was a great learning experience and we were able to learn a lot about the environment in this industry.