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Why Is Whirlpool (WHR) Down 3.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Whirlpool (WHR - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Whirlpool due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Whirlpool Q2 Earnings Lag Estimates, Revenues Dip Y/Y
Whirlpool Corporation posted second-quarter 2024 results, wherein the top and bottom lines declined year over year, and earnings missed the Zacks Consensus Estimate. However, sales delivered a positive surprise for the fourth consecutive time.
During the quarter, Whirlpool benefited from sequential margin expansion globally and gains from the company’s cost takeout actions, partly offset by an unfavorable price/mix.
The appliance maker reported second-quarter adjusted earnings of $2.39 per share which came below the Zacks Consensus Estimate of earnings of $2.40 per share and also tumbled 43.2% year over year.
Net sales of $3,989 million beat the Zacks Consensus Estimate of $3,855 million but declined 16.8% year over year. Excluding the unfavorable impacts of foreign exchange, net sales were $4,026 million, down 16% year over year.
Quarterly gross profit was $626 million, down 23.3% from $816 million reported in the year-ago quarter. The gross margin declined 130 basis points (bps) year over year to 15.7%.
The ongoing EBIT of $212 million declined 39.8% from $352 million in the year-ago quarter. The ongoing EBIT margin of 5.3% contracted 200 bps year over year.
Regional Performances
Net sales for the MDA North America segment declined 5.7% year over year to $2,567 million due to adverse price/mix. Excluding currency also, net sales decreased 5.6% year over year. However, this decline significantly improved throughout the quarter due to effective promotional pricing actions. The segment’s EBIT decreased 40.7% year over year to $163 million, while the EBIT margin contracted 380 bps to 6.3% owing to adverse price/mix partly negated by cost take-out actions.
Net sales from MDA Latin America rose 11.3% year over year to $895 million. Excluding currency, the segment’s sales rose 14.9% year over year, driven by robust share gains in the segment, which more than offset the adverse price/mix. The segment’s EBIT of $52 million advanced 6.1% year over year. The EBIT margin contracted 30 bps year over year to 5.8% attributable to adverse price/mix partly negated by fixed cost leverage and cost take-out actions.
Net sales in MDA Asia increased significantly 19.7% year over year to $340 million. Excluding the currency impacts, sales rose 21.5% due to elevated volume from share gains partly offset by adverse price/mix. The segment’s EBIT of $21 million reflected a robust 110% increase from $10 million reported in the year-ago quarter. Segmental EBIT margin of 6.2% expanded 270 bps from 3.5% in the prior-year quarter, benefiting from cost takeout actions and fixed cost leverage.
Net sales in SDA Global increased 11.3% year over year to $187 million. Excluding the currency impacts, sales improved 11.9% driven by growth from new product launches and direct-to-consumer business offset by unfavorable price/mix. The segment’s EBIT of $26 million reflected a 23.8% increase from $21 million reported in the year-ago quarter. Segmental EBIT margin of 13.9% expanded 140 bps from 12.5% in the prior-year quarter, benefiting from cost actions and volume growth.
Other Financial Details
In the first six months of 2024, Whirlpool used cash of $485 million from operating activities and reported a negative free cash flow of $713 million. The company incurred capital expenditure of $113 million in the same period.
Outlook
Whirlpool reiterated its sales guidance for 2024 and now expects net sales of $16.9 billion, suggesting a decline from $19.5 billion reported in the year-ago period. The company anticipates an ongoing EBIT margin of 6%, indicating an increase from 6.1% reported in 2023.
On a GAAP and ongoing basis, Whirlpool expects earnings per share to be $3.00 per share and $12.00 per share respectively. The adjusted earnings guidance includes $300-$400 million of cost actions. In 2023, Whirlpool reported earnings per share of $8.72 and $16.16, respectively, on a GAAP and ongoing basis.
Adjusted cash provided by operating activities is suggested to be nearly $1.05 billion, with an estimated free cash flow of roughly $500 million. This includes nearly $250-$300 million of MDA Europe cash usage. Notably, the company completed the closure of the Europe transaction on Apr 1, 2024. The company anticipates paying dividends of roughly $400 million in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -15.23% due to these changes.
VGM Scores
At this time, Whirlpool has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Whirlpool has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Whirlpool (WHR) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Whirlpool (WHR - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Whirlpool due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Whirlpool Q2 Earnings Lag Estimates, Revenues Dip Y/Y
Whirlpool Corporation posted second-quarter 2024 results, wherein the top and bottom lines declined year over year, and earnings missed the Zacks Consensus Estimate. However, sales delivered a positive surprise for the fourth consecutive time.
During the quarter, Whirlpool benefited from sequential margin expansion globally and gains from the company’s cost takeout actions, partly offset by an unfavorable price/mix.
The appliance maker reported second-quarter adjusted earnings of $2.39 per share which came below the Zacks Consensus Estimate of earnings of $2.40 per share and also tumbled 43.2% year over year.
Net sales of $3,989 million beat the Zacks Consensus Estimate of $3,855 million but declined 16.8% year over year. Excluding the unfavorable impacts of foreign exchange, net sales were $4,026 million, down 16% year over year.
Quarterly gross profit was $626 million, down 23.3% from $816 million reported in the year-ago quarter. The gross margin declined 130 basis points (bps) year over year to 15.7%.
The ongoing EBIT of $212 million declined 39.8% from $352 million in the year-ago quarter. The ongoing EBIT margin of 5.3% contracted 200 bps year over year.
Regional Performances
Net sales for the MDA North America segment declined 5.7% year over year to $2,567 million due to adverse price/mix. Excluding currency also, net sales decreased 5.6% year over year. However, this decline significantly improved throughout the quarter due to effective promotional pricing actions. The segment’s EBIT decreased 40.7% year over year to $163 million, while the EBIT margin contracted 380 bps to 6.3% owing to adverse price/mix partly negated by cost take-out actions.
Net sales from MDA Latin America rose 11.3% year over year to $895 million. Excluding currency, the segment’s sales rose 14.9% year over year, driven by robust share gains in the segment, which more than offset the adverse price/mix. The segment’s EBIT of $52 million advanced 6.1% year over year. The EBIT margin contracted 30 bps year over year to 5.8% attributable to adverse price/mix partly negated by fixed cost leverage and cost take-out actions.
Net sales in MDA Asia increased significantly 19.7% year over year to $340 million. Excluding the currency impacts, sales rose 21.5% due to elevated volume from share gains partly offset by adverse price/mix. The segment’s EBIT of $21 million reflected a robust 110% increase from $10 million reported in the year-ago quarter. Segmental EBIT margin of 6.2% expanded 270 bps from 3.5% in the prior-year quarter, benefiting from cost takeout actions and fixed cost leverage.
Net sales in SDA Global increased 11.3% year over year to $187 million. Excluding the currency impacts, sales improved 11.9% driven by growth from new product launches and direct-to-consumer business offset by unfavorable price/mix. The segment’s EBIT of $26 million reflected a 23.8% increase from $21 million reported in the year-ago quarter. Segmental EBIT margin of 13.9% expanded 140 bps from 12.5% in the prior-year quarter, benefiting from cost actions and volume growth.
Other Financial Details
In the first six months of 2024, Whirlpool used cash of $485 million from operating activities and reported a negative free cash flow of $713 million. The company incurred capital expenditure of $113 million in the same period.
Outlook
Whirlpool reiterated its sales guidance for 2024 and now expects net sales of $16.9 billion, suggesting a decline from $19.5 billion reported in the year-ago period. The company anticipates an ongoing EBIT margin of 6%, indicating an increase from 6.1% reported in 2023.
On a GAAP and ongoing basis, Whirlpool expects earnings per share to be $3.00 per share and $12.00 per share respectively. The adjusted earnings guidance includes $300-$400 million of cost actions. In 2023, Whirlpool reported earnings per share of $8.72 and $16.16, respectively, on a GAAP and ongoing basis.
Adjusted cash provided by operating activities is suggested to be nearly $1.05 billion, with an estimated free cash flow of roughly $500 million. This includes nearly $250-$300 million of MDA Europe cash usage. Notably, the company completed the closure of the Europe transaction on Apr 1, 2024. The company anticipates paying dividends of roughly $400 million in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -15.23% due to these changes.
VGM Scores
At this time, Whirlpool has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Whirlpool has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.