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Whirlpool (WHR) Gains From Business Strength & Cost Cuts
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Whirlpool Corporation (WHR - Free Report) has been benefiting from its focus on improving operational efficiency, strong consumer demand in Mexico and stabilized inventories. The company remains on track with its long-term targets, with profitable growth of 5-6% and ongoing EBIT margin expansion of 11%-12%.
Based in Benton Harbor, MI, Whirlpool currently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Household Appliances industry, which comes under the ambit of the Zacks Consumer Discretionary sector.
Let’s delve into the factors that make investing in this home appliance manufacturer a smart choice at the moment.
Whirlpool remains well-positioned to benefit from the recovery in the U.S. homebuilding market, which is likely to boost its product demand going forward. Its focus on protecting its margins and productivity amid ongoing supply chain constraints and inflationary pressures bodes well.
For instance, it has implemented several cost-takeout actions, including curtailing structural and discretionary costs, capturing raw material deflation opportunities, effectively managing working capital and syncing supply chain and labor levels with demand.
WHR launched a cost-takeout program worth $500 million that is likely to reduce fixed and variable costs in 2023. It has been actively pursuing its cost management actions and expects $800-$900 million related to gains from these measures and eased raw material inflation.
In April 2022, Whirlpool concluded the strategic review of Europe, the Middle East and Africa operations. The company’s major domestic appliance business in Europe will form a new entity with Arçelik. The deal is expected to close in the fourth quarter of 2023, subject to certain regulatory approvals. The new company is likely to generate more than €6 billion in annual sales and more than €200 million in cost synergies. While Arçelik will own 75% of the new entity, WHR will retain the remaining stake.
The company also remains committed to rewarding its shareholders through dividend payouts and share buyback programs. In the first six months of 2023, the company returned $193 million in cash to shareholders as dividends. At the end of second-quarter 2023, it had $2.6 billion remaining as share repurchase authorization.
However, the company has been experiencing a tough operating environment and tepid global demand amid high inflation. In the second quarter, the company’s net sales fell 6% to $4,792 million from the year-ago quarter. For 2023, WHR expects net sales to be $19.4 billion, suggesting a 1-2% decline from the prior-year figure.
Image Source: Zacks Investment Research
Shares of the company have inched down 1.3% in the past six months against the industry’s growth of 1.5%.
Other Key Picks
Some other top-ranked companies in the consumer discretionary sector are Sonos, Inc. (SONO - Free Report) , GIII Apparel Group (GIII - Free Report) and Alto Ingredients (ALTO - Free Report) .
The Zacks Consensus Estimate for SONO’s current fiscal earnings per share (EPS) indicates growth of 95.9% from the 2022 reported number.
GIII Apparel flaunts a Zacks Rank #1 at present. It delivered a trailing four-quarter earnings surprise of 526.6%, on average. The Zacks Consensus Estimate for GIII’s current fiscal year sales and EPS implies growth of 2.4% and 14.7%, respectively, year over year.
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) Gains From Business Strength & Cost Cuts
Whirlpool Corporation (WHR - Free Report) has been benefiting from its focus on improving operational efficiency, strong consumer demand in Mexico and stabilized inventories. The company remains on track with its long-term targets, with profitable growth of 5-6% and ongoing EBIT margin expansion of 11%-12%.
Based in Benton Harbor, MI, Whirlpool currently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Household Appliances industry, which comes under the ambit of the Zacks Consumer Discretionary sector.
Let’s delve into the factors that make investing in this home appliance manufacturer a smart choice at the moment.
Whirlpool remains well-positioned to benefit from the recovery in the U.S. homebuilding market, which is likely to boost its product demand going forward. Its focus on protecting its margins and productivity amid ongoing supply chain constraints and inflationary pressures bodes well.
For instance, it has implemented several cost-takeout actions, including curtailing structural and discretionary costs, capturing raw material deflation opportunities, effectively managing working capital and syncing supply chain and labor levels with demand.
WHR launched a cost-takeout program worth $500 million that is likely to reduce fixed and variable costs in 2023. It has been actively pursuing its cost management actions and expects $800-$900 million related to gains from these measures and eased raw material inflation.
In April 2022, Whirlpool concluded the strategic review of Europe, the Middle East and Africa operations. The company’s major domestic appliance business in Europe will form a new entity with Arçelik. The deal is expected to close in the fourth quarter of 2023, subject to certain regulatory approvals. The new company is likely to generate more than €6 billion in annual sales and more than €200 million in cost synergies. While Arçelik will own 75% of the new entity, WHR will retain the remaining stake.
The company also remains committed to rewarding its shareholders through dividend payouts and share buyback programs. In the first six months of 2023, the company returned $193 million in cash to shareholders as dividends. At the end of second-quarter 2023, it had $2.6 billion remaining as share repurchase authorization.
However, the company has been experiencing a tough operating environment and tepid global demand amid high inflation. In the second quarter, the company’s net sales fell 6% to $4,792 million from the year-ago quarter. For 2023, WHR expects net sales to be $19.4 billion, suggesting a 1-2% decline from the prior-year figure.
Image Source: Zacks Investment Research
Shares of the company have inched down 1.3% in the past six months against the industry’s growth of 1.5%.
Other Key Picks
Some other top-ranked companies in the consumer discretionary sector are Sonos, Inc. (SONO - Free Report) , GIII Apparel Group (GIII - Free Report) and Alto Ingredients (ALTO - Free Report) .
Sonos sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SONO’s current fiscal earnings per share (EPS) indicates growth of 95.9% from the 2022 reported number.
GIII Apparel flaunts a Zacks Rank #1 at present. It delivered a trailing four-quarter earnings surprise of 526.6%, on average. The Zacks Consensus Estimate for GIII’s current fiscal year sales and EPS implies growth of 2.4% and 14.7%, respectively, year over year.
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.