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JPMorgan Chase Upgrades Whirlpool to ‘Overweight’

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Mar. 16 2016, Published 1:31 p.m. ET

Price movement of Whirlpool

Whirlpool (WHR) has a market cap of $13.1 billion. WHR rose by 1.7% to close at $168.84 per share as of March 15, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 6.5%, 28.5%, and 15.7%, respectively.

Currently, WHR is trading 10.2% above its 20-day moving average, 19.0% above its 50-day moving average, and 6.8% above 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 midcap US companies. The YTD price movement of VO was -1.2% as of March 14, 2016.

The iShares Russell Mid-Cap Value ETF (IWS) invests 0.38% of its holdings in Whirlpool. The ETF tracks an index of US midcap 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) — $6.2 billion
  • Sears Holdings Corporation (SHLD) — $1.7 billion
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JPMorgan Chase upgraded Whirlpool

JPMorgan Chase has upgraded Whirlpool Corporation rating to “overweight” from “neutral” and also set the target at $205.00 per share.

Performance of Whirlpool in 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, Whirlpool reported net sales of $20,891.0 million, a rise of 5.1% 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. This compares to 0.96x and 2.5x, respectively, in fiscal 2014.

Whirlpool’s price-to-earnings and price-to-book value ratios were 17.2x and 2.8x, respectively, as of March 15, 2016.

Projections

Whirlpool (WHR) made the following projections for fiscal 2016:

  • It expects generally accepted accounting principles diluted EPS of $11.25–$12.00 per share.
  • It expects the ongoing business diluted EPS to be $14.00–$14.75 per share.
  • The company expects the free cash flow to be $700 million–$800 million. This includes restructuring cash outlays related to acquisitions of up to $200 million and capital spending of $700 million–$750 million.
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