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Moody’s Upgraded Whirlpool’s Rating to Baa1

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Price movement of Whirlpool

Whirlpool (WHR) has a market cap of $11.9 billion. WHR rose by 1.8% to close at $154.55 per share as of February 26, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 8.8%, 17.5%, and 6.9%, respectively.

Currently, WHR is trading 12.0% above its 20-day moving average, 11.2% above its 50-day moving average, and 3.2% below its 200-day moving average.

The Vanguard Mid-Cap ETF (VO) invests 0.42% of its holdings in Whirlpool. The ETF tracks the CRSP US Mid-Cap Index, a diversified index of mid-cap US companies. The YTD price movement of VO was -7.1% as of February 25, 2016.

The iShares Russell Mid-Cap Value ETF (IWS) invests 0.38% of its holdings in Whirlpool. The ETF tracks an index of US mid-cap value stocks. The index selects from the bottom 80% of the Russell 1000, screening on value factors.

The market caps of Whirlpool’s competitors are as follows:

  • Spectrum Brands Holdings (SPB): $5.7 billion
  • Sears Holdings (SHLD): $2.0 billion
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Moody’s upgraded Whirlpool’s rating

Moody’s Investors Service has upgraded Whirlpool’s senior unsecured rating to Baa1 from Baa2. Moody’s expects that Whirlpool’s operating performance and credit metrics will continue to improve. It also expects that the company has financial flexibility and liquidity to withstand the economic downturn. The rating outlook is stable.

Performance of Whirlpool in recent 4Q15 and 2015

Whirlpool reported fiscal 4Q15 net sales of $5,560.0 million, a fall of 7.4% compared to net sales of $6,003.0 million in fiscal 4Q14. The company’s cost of products sold as a percentage of net sales and gross margin fell by 1.2% and 2.3%, respectively, in fiscal 4Q15 compared to fiscal 4Q14.

Its net income and EPS (earnings per share) rose to $180.0 million and $2.28, respectively, in fiscal 4Q15 compared to $81.0 million and $1.02, respectively, in fiscal 4Q14.

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Fiscal 2015 results

In fiscal 2015, WHR reported net sales of $20,891.0 million, a rise of 5.1% YoY (year-over-year). The company’s net income and EPS rose to $783.0 million and $9.83, respectively, in fiscal 2015 compared to $650.0 million and $8.17, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories fell by 24.8% and 4.4%, respectively, in fiscal 2015. Its current ratio and debt-to-equity ratio fell to 0.95x and 2.4x, respectively, in fiscal 2015 compared to 0.96x and 2.5x, in fiscal 2014.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Whirlpool are 15.7x and 2.5x, respectively, as of February 26, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • GAAP diluted EPS will be in the range of $11.25 to $12.00 per share.
  • Ongoing business diluted EPS will be in the range of $14.00 to $14.75 per share.
  • Free cash flows will be in the range of $700 million to $800 million. This includes restructuring cash outlays related to the acquisitions of up to $200 million and capital spending of $700 million to $750 million.

Keep checking in with Market Realist’s Consumer Discretionary page for ongoing analysis.

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