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Whirlpool (WHR) Stock Appreciates on Innovation Mantra
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Shares of Whirlpool Corporation (WHR - Free Report) have been rallying year-to-date as is evident from the 20.6% price appreciation. The rise in the stock price of this Michigan-based home appliances manufacturer can be attributed to its innovation strategy, which is taking its business to the next level. Whirlpool is among the few companies that heavily invest in technologies to produce differentiated products to suit the needs of their end consumers.
The company’s commitment toward innovation recently came to the limelight as it devised a product that can ease and expedite the brewing process, thereby enhancing consumers’ beer-producing experience and quality. Vessi – a Beer Fermentor and Dispenser system for home brewers – launched on Indiegogo (an international crowdfunding platform), highlights the company’s attempt to capture on the increasing popularity of craft beer.
This apart, the company is keen on expanding on the global platform to further solidify its market share. Though the company appears to be mostly dependent on the North American region for its revenues, it has been enhancing its presence in other parts of the world as well. To this end, Whirlpool acquired American Dryer Corporation, Italy-based Indesit Company S.p.A. and China’s Hefei Rongshida Sanyo Electric Co. Ltd. and is rigorously integrating these acquisitions into its business. Some of these acquisitions have already started generating synergies, particularly in Europe and China, where the integration is well on track. Going forward, Whirlpool aims to hasten the integration process to boost results.
However, this global leader in home appliances continues to face foreign currency headwinds, which resulted in lower-than-expected top-line and bottom-line results in the first quarter of 2016. In fact, the company’s sales, which missed estimates for the fifth straight quarter, also declined year over year mainly due to currency woes and weak emerging market demand, specifically in Brazil. While earnings in the quarter bore a $0.50 per share negative impact from currency headwinds, the 22.2% decline in Latin American sales can be attributed to the sluggish demand in emerging markets.
The company remains apprehensive about the aforementioned challenges weighing on results going forward. For 2016, the company expects industry unit shipments to fall 10% in Latin America (based on projections of a 10% decline in demand) and remain flat in Asia. Moreover, the company anticipates the dollar to remain strong throughout 2016, in turn weighing on sales and earnings.
Despite these hurdles, the company reiterated its 2016 earnings view based on its constant growth drivers and expectations of stronger volumes in the second half. Further, this Zacks Rank #3 (Hold) stock’s strategy of undertaking innovations that helps it tap additional sales and gain market share holds promise.
Stocks to Consider
Some better-ranked consumer discretionary stocks include AB Electrolux (publ) (ELUXY - Free Report) and Rent-A-Center Inc. and Leggett & Platt Inc. (LEG - Free Report) . While AB Electrolux and Rent-A-Center sport a Zacks Rank #1 (Strong Buy), Leggett & Platt holds a Zacks Rank #2 (Buy).
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Whirlpool (WHR) Stock Appreciates on Innovation Mantra
Shares of Whirlpool Corporation (WHR - Free Report) have been rallying year-to-date as is evident from the 20.6% price appreciation. The rise in the stock price of this Michigan-based home appliances manufacturer can be attributed to its innovation strategy, which is taking its business to the next level. Whirlpool is among the few companies that heavily invest in technologies to produce differentiated products to suit the needs of their end consumers.
The company’s commitment toward innovation recently came to the limelight as it devised a product that can ease and expedite the brewing process, thereby enhancing consumers’ beer-producing experience and quality. Vessi – a Beer Fermentor and Dispenser system for home brewers – launched on Indiegogo (an international crowdfunding platform), highlights the company’s attempt to capture on the increasing popularity of craft beer.
This apart, the company is keen on expanding on the global platform to further solidify its market share. Though the company appears to be mostly dependent on the North American region for its revenues, it has been enhancing its presence in other parts of the world as well. To this end, Whirlpool acquired American Dryer Corporation, Italy-based Indesit Company S.p.A. and China’s Hefei Rongshida Sanyo Electric Co. Ltd. and is rigorously integrating these acquisitions into its business. Some of these acquisitions have already started generating synergies, particularly in Europe and China, where the integration is well on track. Going forward, Whirlpool aims to hasten the integration process to boost results.
However, this global leader in home appliances continues to face foreign currency headwinds, which resulted in lower-than-expected top-line and bottom-line results in the first quarter of 2016. In fact, the company’s sales, which missed estimates for the fifth straight quarter, also declined year over year mainly due to currency woes and weak emerging market demand, specifically in Brazil. While earnings in the quarter bore a $0.50 per share negative impact from currency headwinds, the 22.2% decline in Latin American sales can be attributed to the sluggish demand in emerging markets.
The company remains apprehensive about the aforementioned challenges weighing on results going forward. For 2016, the company expects industry unit shipments to fall 10% in Latin America (based on projections of a 10% decline in demand) and remain flat in Asia. Moreover, the company anticipates the dollar to remain strong throughout 2016, in turn weighing on sales and earnings.
Despite these hurdles, the company reiterated its 2016 earnings view based on its constant growth drivers and expectations of stronger volumes in the second half. Further, this Zacks Rank #3 (Hold) stock’s strategy of undertaking innovations that helps it tap additional sales and gain market share holds promise.
Stocks to Consider
Some better-ranked consumer discretionary stocks include AB Electrolux (publ) (ELUXY - Free Report) and Rent-A-Center Inc. and Leggett & Platt Inc. (LEG - Free Report) . While AB Electrolux and Rent-A-Center sport a Zacks Rank #1 (Strong Buy), Leggett & Platt holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>