uploads/2016/03/whr-pm.jpg

Why Did Whirlpool Rise in Fiscal 4Q15 and 2015?

By

Updated

Price movement 

Whirlpool (WHR) has a market cap of $12.7 billion. It rose by 4.0%. It closed at $164.70 per share as of March 11, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is 2.2%, 23.3%, and 12.8%, respectively.

Currently, Whirlpool is trading 10.0% above its 20-day moving average, 16.6% above its 50-day moving average, and 4.1% above its 200-day moving average.

The Vanguard Mid-Cap ETF (VO) invests 0.42% of its holdings in Whirlpool. VO tracks the CRSP US Mid-Cap Index—a diversified index of mid-cap US companies. VO’s YTD price movement was -3.0% as of March 10, 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. It screens on value factors.

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

  • Spectrum Brands Holdings (SPB) – $6.1 billion
  • Sears Holdings Corporation (SHLD) – $1.8 billion
Article continues below advertisement

South Korea won a partial victory over the US duties

South Korea found a fault with the method used to calculate duties imposed on Korean-made washing machines that are deemed to be subsidized and unfairly priced. It won a partial victory against the US through the WTO (World Trade Organization).

After the complaint from Whirlpool, the U.S. Department of Commerce imposed up to 82% of duties on washers made by Samsung Electronics, LG Electronics., and Daewoo Electronics in 2013.

A WTO panel rejected several of South Korea’s claims including objections to the U.S. Department of Commerce’s findings that tax credit subsidies weren’t tied to specific products.

Performance in fiscal 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.

Article continues below advertisement

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—compared to 0.96x and 2.5x, in fiscal 2014.

Whirlpool’s price-to-earnings and price-to-book value ratios are 16.8x and 2.7x, respectively, as of March 11, 2016.

Projection

The company 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.
Advertisement

More From Market Realist