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Whirlpool’s Bottom Line Rises in 2Q16

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Price movement

Whirlpool (WHR) has a market cap of $14.2 billion. It rose by 2.7% to close at $187.61 per share on July 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 6.9%, 5.3%, and 29.3%, respectively, on the same day. WHR is trading 9.8% above its 20-day moving average, 8.7% above its 50-day moving average, and 17.1% above its 200-day moving average.

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Related ETFs and peers

The First Trust Large Cap Value AlphaDex ETF (FTA) invests 0.34% of its holdings in Whirlpool. The ETF tracks an index that selects and weights value stocks from the S&P 500 Value Index using fundamental factors including sales, book value, and cash flows. The YTD price movement of FTA was 8.7% on July 22.

The SPDR S&P 500 ETF (SPY) invests 0.07% of its holdings in Whirlpool. The ETF tracks a market-cap-weighted index of US large and mid-cap stocks selected by the S&P committee.

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

  • Spectrum Brands Holdings (SPB): $7.0 billion
  • Sears Holdings (SHLD): $1.6 billion

Performance of Whirlpool in 2Q16

Whirlpool reported 2Q16 net sales of $5.20 billion, a fall of 0.19% from the net sales of $5.21 billion in 2Q15. The company’s gross margin and operating profit rose by 7.2% and 34.1%, respectively, between 2Q15 and 2Q16.

Its net income and EPS (earnings per share) rose to $320.0 million and $4.15, respectively, in 2Q16, compared with $177.0 million and $2.21, respectively, in 2Q15.

Whirlpool’s cash and cash equivalents and inventories rose by 24.2% and 22.3%, respectively, between 4Q15 and 2Q16. Its current ratio rose to 0.98x, and its long-term debt-to-equity ratio fell to 0.96x in 2Q16, compared with 0.95x and 0.99x, respectively, in 4Q15.

Projection

The company has made the following projections for fiscal 2016:

  • EPS in the range of $11.50 to $12
  • ongoing business EPS in the range of $14.25 to $14.75
  • free cash flow in the range of $700 to $800 million, which includes restructuring cash outlays of up to $200 million, legacy product warranty and liability costs of $155 million, and capital spending of $700 million to $750 million.
  • cash from operating activities in the range of $1.4 billion to $1.6 billion
  • industry unit shipments to increase by 5%–6% in the United States, to be flat to up 2% in EMEA (Europe, the Middle East, and Africa), to fall by 10% in Brazil, and to be flat in Asia

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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