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Is Whirlpool (WHR) Poised for Dismal Earnings Again in Q4?
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Whirlpool Corp. (WHR - Free Report) is slated to release fourth-quarter 2017 results on Jan 24, after the closing bell. Last quarter, the company reported a negative earnings surprise of 1.8%.
In fact, Whirlpool has missed estimates in the last four quarters, with an average negative earnings surprise of 4.8%. Notably, third-quarter 2017 marked the company’s fifth straight quarter of negative earnings surprise and second consecutive quarter of sales lag. The primary concern for the company in recent quarters has been raw material cost inflation and unfavorable price/mix. Let’s see how things are shaping up for this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Whirlpool will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is $4.01, reflecting a year-over-year decline of 7.4%. We note that the Zacks Consensus Estimate has been stable ahead of the earnings release. Analysts polled by Zacks expect revenues of $5.8 billion, up 3.2% from the year-ago quarter.
Whirlpool Corporation Price, Consensus and EPS Surprise
Moreover, we note that the stock has declined 13.6% in the last six months. However, this compares better than the industry’s 26.1% downside.
Factors at Play
Whirlpool’s aforementioned dismal surprise trend has been a concern for investors. The company is clearly grappling with adverse product price/mix and raw material cost inflation has been denting the operating margin for the last few quarters. Moreover, the company anticipates higher raw material prices to persist through 2018. This has resulted in a lowered earnings view for 2017.
The company now envisions adjusted earnings per share for 2017 in a range of $13.60-$13.90 compared with $14.50-$15.00, guided earlier. On a GAAP basis, Whirlpool anticipates earnings in a range of $11.10-$11.40 per share compared with the previous estimate of $12.40-$12.90 for 2017.
Further, we believe that volatility in commodity prices, particularly steel, may adversely affect the company’s operating performance. Additionally, Whirlpool derives a significant portion of revenues from international operations, which exposes it to risks in global market. Whirlpool’s customer concentration is also high which is likely to hurt the margins.
However, Whirlpool’s robust product pipeline, solid innovations and cost productivity initiatives keep it on track to deliver long-term goals. It aims to deliver organic revenue growth of 3-5% every year through 2020. Further, it anticipates growth efforts to boost consumer demand and lead to enhanced price mix, which encouraged management to target EBIT margin to exceed 10% by 2020.
Moreover, Whirlpool has been riding on innovation strategy that helps it to tap additional sales and gain market share. Further, the company is striving to improve margins through a series of measures including cost-based price increments and cost-reduction initiatives focused on enriching business efficiency.
That said, let’s wait and see if the company’s strategic efforts can turnaround the aforementioned near-term challenges.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Whirlpool is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Whirlpool has an Earnings ESP of +2.99% as the Most Accurate estimate of $4.13 is pegged higher than the Zacks Consensus Estimate of $4.01 per share. However, the company’s Zacks Rank #4 (Sell) lowers the chances of a beat in the ensuing release. We caution against stocks with Zacks Rank #4 and 5 (Strong Sell).
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Estee Lauder Companies Inc. (EL - Free Report) currently has an Earnings ESP of +0.51% and a Zacks Rank #2.
The Clorox Co. (CLX - Free Report) currently has an Earnings ESP of +0.24% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Is Whirlpool (WHR) Poised for Dismal Earnings Again in Q4?
Whirlpool Corp. (WHR - Free Report) is slated to release fourth-quarter 2017 results on Jan 24, after the closing bell. Last quarter, the company reported a negative earnings surprise of 1.8%.
In fact, Whirlpool has missed estimates in the last four quarters, with an average negative earnings surprise of 4.8%. Notably, third-quarter 2017 marked the company’s fifth straight quarter of negative earnings surprise and second consecutive quarter of sales lag. The primary concern for the company in recent quarters has been raw material cost inflation and unfavorable price/mix. Let’s see how things are shaping up for this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Whirlpool will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is $4.01, reflecting a year-over-year decline of 7.4%. We note that the Zacks Consensus Estimate has been stable ahead of the earnings release. Analysts polled by Zacks expect revenues of $5.8 billion, up 3.2% from the year-ago quarter.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation Price, Consensus and EPS Surprise | Whirlpool Corporation Quote
Moreover, we note that the stock has declined 13.6% in the last six months. However, this compares better than the industry’s 26.1% downside.
Factors at Play
Whirlpool’s aforementioned dismal surprise trend has been a concern for investors. The company is clearly grappling with adverse product price/mix and raw material cost inflation has been denting the operating margin for the last few quarters. Moreover, the company anticipates higher raw material prices to persist through 2018. This has resulted in a lowered earnings view for 2017.
The company now envisions adjusted earnings per share for 2017 in a range of $13.60-$13.90 compared with $14.50-$15.00, guided earlier. On a GAAP basis, Whirlpool anticipates earnings in a range of $11.10-$11.40 per share compared with the previous estimate of $12.40-$12.90 for 2017.
Further, we believe that volatility in commodity prices, particularly steel, may adversely affect the company’s operating performance. Additionally, Whirlpool derives a significant portion of revenues from international operations, which exposes it to risks in global market. Whirlpool’s customer concentration is also high which is likely to hurt the margins.
However, Whirlpool’s robust product pipeline, solid innovations and cost productivity initiatives keep it on track to deliver long-term goals. It aims to deliver organic revenue growth of 3-5% every year through 2020. Further, it anticipates growth efforts to boost consumer demand and lead to enhanced price mix, which encouraged management to target EBIT margin to exceed 10% by 2020.
Moreover, Whirlpool has been riding on innovation strategy that helps it to tap additional sales and gain market share. Further, the company is striving to improve margins through a series of measures including cost-based price increments and cost-reduction initiatives focused on enriching business efficiency.
That said, let’s wait and see if the company’s strategic efforts can turnaround the aforementioned near-term challenges.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Whirlpool is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Whirlpool has an Earnings ESP of +2.99% as the Most Accurate estimate of $4.13 is pegged higher than the Zacks Consensus Estimate of $4.01 per share. However, the company’s Zacks Rank #4 (Sell) lowers the chances of a beat in the ensuing release. We caution against stocks with Zacks Rank #4 and 5 (Strong Sell).
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Tractor Supply Company (TSCO - Free Report) has an Earnings ESP of +0.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estee Lauder Companies Inc. (EL - Free Report) currently has an Earnings ESP of +0.51% and a Zacks Rank #2.
The Clorox Co. (CLX - Free Report) currently has an Earnings ESP of +0.24% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>