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Whirlpool Corporation (WHR - Free Report) manufactures and markets home appliances and related products globally. The company’s principal products include refrigerators, freezers, ice makers, water filters, laundry appliances, and dishwasher appliances. WHR distributes its products under well-known brands such as Maytag, KitchenAid, Whirlpool, Everydrop, and Royalstar brands. The company sells its products to retailers, distributors, dealers, builders, and directly to consumers.
The Zacks Rundown
WHR has been severely underperforming the market over the past year. A Zacks Rank #5 (Strong Sell) stock, WHR experienced a climax top in May of last year and has been in a price downtrend ever since. The stock is hitting a series of 52-week lows and represents a compelling short opportunity as the market continues its volatile start to the year.
Whirlpool is part of the Zacks Household Appliances industry group, which currently ranks in the bottom 9% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. The industry has fallen nearly 49% this year, widely underperforming the market:
Image Source: Zacks Investment Research
While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies. Also note the unfavorable characteristics for this group below:
Image Source: Zacks Investment Research
Weak Foundation: Falling Short on Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for WHR lately. The household appliances company most recently reported Q3 earnings results last week of $4.49/share, a -19.68% miss versus the $5.59 consensus estimate. Revenues of $4.78 billion also missed the mark by -8.62%, and WHR has missed on revenue projections for the last five quarters. Consistently missing expectations by a wide margin is a recipe for stock price underperformance.
Analysts have revised Q4 earnings estimates down by -8.81% in the past week. The Zacks Consensus Estimate now stands at $5.38/share, reflecting negative growth of -12.38% relative to the same quarter last year. Revenues are seen slipping -6.98% to $5.41 billion. These are the types of negative trends that the bears like to see.
Image Source: Zacks Investment Research
Technical Outlook
WHR stock has been steadily falling since last year and has now established a well-defined downtrend. Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping down. Shares have declined nearly 40% in the past year, and the stock continues to trade below both moving averages.
Image Source: StockCharts
While not the most accurate indicator, WHR has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. WHR would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. The stock is making a series of lower lows – another good sign for the bears.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock doesn’t deserve a spot in the household portfolio. The fact that WHR is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. Falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
WHR is rated a ‘C’ in our Zacks Style Score Growth category, indicating more weakness ahead. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy.
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Bear of the Day: Whirlpool Corp. (WHR)
Whirlpool Corporation (WHR - Free Report) manufactures and markets home appliances and related products globally. The company’s principal products include refrigerators, freezers, ice makers, water filters, laundry appliances, and dishwasher appliances. WHR distributes its products under well-known brands such as Maytag, KitchenAid, Whirlpool, Everydrop, and Royalstar brands. The company sells its products to retailers, distributors, dealers, builders, and directly to consumers.
The Zacks Rundown
WHR has been severely underperforming the market over the past year. A Zacks Rank #5 (Strong Sell) stock, WHR experienced a climax top in May of last year and has been in a price downtrend ever since. The stock is hitting a series of 52-week lows and represents a compelling short opportunity as the market continues its volatile start to the year.
Whirlpool is part of the Zacks Household Appliances industry group, which currently ranks in the bottom 9% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. The industry has fallen nearly 49% this year, widely underperforming the market:
Image Source: Zacks Investment Research
While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies. Also note the unfavorable characteristics for this group below:
Image Source: Zacks Investment Research
Weak Foundation: Falling Short on Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for WHR lately. The household appliances company most recently reported Q3 earnings results last week of $4.49/share, a -19.68% miss versus the $5.59 consensus estimate. Revenues of $4.78 billion also missed the mark by -8.62%, and WHR has missed on revenue projections for the last five quarters. Consistently missing expectations by a wide margin is a recipe for stock price underperformance.
Analysts have revised Q4 earnings estimates down by -8.81% in the past week. The Zacks Consensus Estimate now stands at $5.38/share, reflecting negative growth of -12.38% relative to the same quarter last year. Revenues are seen slipping -6.98% to $5.41 billion. These are the types of negative trends that the bears like to see.
Image Source: Zacks Investment Research
Technical Outlook
WHR stock has been steadily falling since last year and has now established a well-defined downtrend. Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping down. Shares have declined nearly 40% in the past year, and the stock continues to trade below both moving averages.
Image Source: StockCharts
While not the most accurate indicator, WHR has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. WHR would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. The stock is making a series of lower lows – another good sign for the bears.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock doesn’t deserve a spot in the household portfolio. The fact that WHR is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. Falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
WHR is rated a ‘C’ in our Zacks Style Score Growth category, indicating more weakness ahead. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy.