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Whirlpool (WHR) to Gain From Homebuilding Market Amid Headwinds
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Whirlpool Corporation (WHR - Free Report) is set to gain from the recovery in the U.S. homebuilding market, which is expected to drive demand for its products in the quarters ahead. The company has also been benefiting from significant cost reductions, improved supply chains, stabilized inventories, strong consumer demand in Mexico and solid market share.
The company remains focused on portfolio transformation initiatives, targeting higher-growth and higher-margin businesses. It is poised to reap gains from the housing-driven demand recovery, as it now has eight of the top 10 national builders as its trade customers. WHR remains on track with its long-term targets, with profitable growth of 5-6% and ongoing EBIT margin expansion of 11%-12%.
Whirlpool also remains committed to protecting margins and productivity amid ongoing supply chain constraints and inflationary pressures. WHR implemented several cost reduction actions, including curtailing structural and discretionary costs, capturing raw material deflation opportunities and effectively managing working capital. In second-quarter 2023, its cost-take-out actions delivered a $150-million benefit on a year-over-year basis.
It remains committed to rewarding its shareholders through share buyback programs and dividend payouts. In the first six months of 2023, the company returned $193 million in cash to shareholders as dividends. As of Jun 30, 2023, it had $2.6 billion remaining as share repurchase authorization.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 5.4% in the past three months compared with the industry’s growth of 5.5%.
However, the company has been reeling under a challenging operating environment and sluggish global demand from high inflation. The second quarter’s net sales of $4,792 million dropped 6% from the year-ago quarter. For 2023, it forecasts net sales of $19.4 billion, suggesting a 1-2% decline from the prior-year actual.
Despite improvements, Whirlpool has been witnessing supply chain disruptions in some parts of the world. The company is also ailing from an unfavorable product price/mix and high raw material costs. In the second quarter, WHR’s gross profit declined by 9% year-over-year to $816 million.
High debt levels also remain concerning for Whirlpool, raising financial obligations and draining profitability. The company ended the second quarter with long-term debt of $6,393 million, up 32.3% on a year-over-year basis. Further, its debt load appears too high to be managed by its cash and cash equivalents of $1,309 million as of Jun 30, 2023.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and Alto Ingredients (ALTO - Free Report) .
RCL delivered a trailing four-quarter earnings surprise of 28.5%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 54.5% and 180.3%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current fiscal year sales and EPS implies growth of 17.1% and 18.4%, respectively, year over year.
LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.
Alto Ingredients has a Zacks Rank #2 at present.
ALTO delivered an earnings surprise of 242.9% in the last reported quarter. The Zacks Consensus Estimate for ALTO’s upcoming quarter’s EPS indicates growth of 125% from the previous year’s reported figure.
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Whirlpool (WHR) to Gain From Homebuilding Market Amid Headwinds
Whirlpool Corporation (WHR - Free Report) is set to gain from the recovery in the U.S. homebuilding market, which is expected to drive demand for its products in the quarters ahead. The company has also been benefiting from significant cost reductions, improved supply chains, stabilized inventories, strong consumer demand in Mexico and solid market share.
The company remains focused on portfolio transformation initiatives, targeting higher-growth and higher-margin businesses. It is poised to reap gains from the housing-driven demand recovery, as it now has eight of the top 10 national builders as its trade customers. WHR remains on track with its long-term targets, with profitable growth of 5-6% and ongoing EBIT margin expansion of 11%-12%.
Whirlpool also remains committed to protecting margins and productivity amid ongoing supply chain constraints and inflationary pressures. WHR implemented several cost reduction actions, including curtailing structural and discretionary costs, capturing raw material deflation opportunities and effectively managing working capital. In second-quarter 2023, its cost-take-out actions delivered a $150-million benefit on a year-over-year basis.
It remains committed to rewarding its shareholders through share buyback programs and dividend payouts. In the first six months of 2023, the company returned $193 million in cash to shareholders as dividends. As of Jun 30, 2023, it had $2.6 billion remaining as share repurchase authorization.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 5.4% in the past three months compared with the industry’s growth of 5.5%.
However, the company has been reeling under a challenging operating environment and sluggish global demand from high inflation. The second quarter’s net sales of $4,792 million dropped 6% from the year-ago quarter. For 2023, it forecasts net sales of $19.4 billion, suggesting a 1-2% decline from the prior-year actual.
Despite improvements, Whirlpool has been witnessing supply chain disruptions in some parts of the world. The company is also ailing from an unfavorable product price/mix and high raw material costs. In the second quarter, WHR’s gross profit declined by 9% year-over-year to $816 million.
High debt levels also remain concerning for Whirlpool, raising financial obligations and draining profitability. The company ended the second quarter with long-term debt of $6,393 million, up 32.3% on a year-over-year basis. Further, its debt load appears too high to be managed by its cash and cash equivalents of $1,309 million as of Jun 30, 2023.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and Alto Ingredients (ALTO - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RCL delivered a trailing four-quarter earnings surprise of 28.5%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 54.5% and 180.3%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current fiscal year sales and EPS implies growth of 17.1% and 18.4%, respectively, year over year.
LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.
Alto Ingredients has a Zacks Rank #2 at present.
ALTO delivered an earnings surprise of 242.9% in the last reported quarter. The Zacks Consensus Estimate for ALTO’s upcoming quarter’s EPS indicates growth of 125% from the previous year’s reported figure.