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Whirlpool Stock Fell 6.6%, Q4 Sales Missed Estimates

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Whirlpool’s Q4 results

Whirlpool’s (WHR) fourth-quarter sales of $5.66 billion missed the consensus estimate of $5.76 billion. However, the adjusted EPS was $4.75, which beat analysts’ estimate of $4.23. Whirlpool stock fell 6.6% in the aftermarket hours on January 28. So far in 2019, the stock has gained 16.5% as of January 28.

On a year-over-year basis, the overall sales decreased 0.7%. The sales rose 2.5%, excluding the currency movement impact.

Weakness in the EMEA region is a concern. Sales in the region fell 6.3%, excluding the currency impact. North America sales (excluding the impact of foreign currency translation) rose 5.4%, while Asia and Latin America reported top-line growth of 11.2% and 1.1%, respectively.

On a reported basis, Whirlpool’s fourth-quarter EPS was $2.64, which was substantially better than the EPS of -$3.74 in the fourth quarter the previous year. Higher profits and the lower tax rate supported the bottom-line growth.

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The gross profit fell 3.6% to $950 million due to lower sales. The gross margin of 16.8% contracted by 50 basis points. In the fourth quarter, the operating profit rose 15.7% to $309 million. The operating margin for the fourth quarter expanded by 70 basis points to 5.4% due to the favorable product price and mix and restructuring benefits amid increasing costs.

Management’s outlook

For 2019, Whirlpool’s management expects the cash from operations to be $1.4 billion–$1.5 billion. The adjusted free cash flow for 2019 is projected to be $800 million–$900 million.

For 2019, management expects the EPS from continuing operations to be $12.75–$13.75. On an ongoing basis, Whirlpool’s adjusted EPS is projected to be $14.00–$15.00.

Analysts’ ratings

As of January 28, among the 11 analysts covering Whirlpool stock, 18% recommended a “buy,” while ~82% recommended a “hold.” There haven’t been any price changes since the fourth-quarter announcement. Analysts’ 12-month average target price for Whirlpool stock is $143.38, which reflects a 15.2% upside based on its stock price on January 28.

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