uploads/2016/10/whr-pm.png

Drees Homes Extends Its Agreement with Whirlpool

By

Updated

Price movement

Whirlpool (WHR) fell 0.01% to close at $162.16 per share during the fourth week of September 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.01%, -9.2%, and 12.3%, respectively, on September 30.

WHR is trading 3.0% below its 20-day moving average, 8.9% below its 50-day moving average, and 1.9% below its 200-day moving average.

Article continues below advertisement

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 such as sales, book value, and cash flows. The YTD price movement of FTA was 10.8% on September 30.

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) — $8.1 billion
  • Sears Holdings (SHLD) — $1.2 billion

Latest news on Whirlpool

In a press release on September 29, 2016, Whirlpool reported, “Drees Homes, a builder with a storied 85-plus year history, has signed a contract with Whirlpool Corporation that continues an exclusive relationship of more than 30 years with the world’s leading major appliance manufacturer.”

It added, “Drees features Whirlpool®, KitchenAid® and Jenn-Air® brand appliances in its homes as part of its agreement with Whirlpool Corporation, which now extends through 2019.”

Article continues below advertisement

Performance of Whirlpool in 2Q16

Whirlpool reported 2Q16 net sales of $5.20 billion, a fall of 0.19% from its net sales of $5.21 billion in 2Q15. The company’s gross margin and operating profit rose 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 to $177.0 million and $2.21, respectively, in 2Q15.

Whirlpool’s cash and cash equivalents and inventories rose 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 to 0.95x and 0.99x, respectively, in 4Q15.

Projections

Whirlpool has made the following projections for 2016:

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

Next, we’ll discuss General Mills (GIS).

Advertisement

More From Market Realist