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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Whirlpool Corporation (WHR - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Whirlpool has a trailing twelve months PE ratio of 13.08, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.93. If we focus on the stock’s long-term PE trend, the current level puts Whirlpool’s current PE ratio below its mid-point over the past five years.
Further, the stock’s PE compares just favorably with the Zacks classified Household Appliances sector’s trailing twelve months PE ratio, which stands at 13.32. At the very least, this indicates that the stock is somewhat undervalued right now, compared to its peers.
We should also point out that Whirlpool has a forward PE ratio (price relative to this year’s earnings) of just 11.62, so it is fair to say that a slightly more value-oriented path may be ahead for Whirlpool stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Whirlpool has a P/S ratio of about 0.67. This is significantly lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Whirlpool currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Whirlpool a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Whirlpool is just 0.72, a level that is far lower than the industry average of 1.10. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, WHR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Whirlpool might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘F’. This gives WHR a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending up. The current quarter has seen one estimate go higher in the past sixty days compared to none lower, while the full year estimate has seen one upward and no downward revision in the same time period.
This has had a positive impact on the consensus estimate though as the current quarter consensus estimate has risen by 5% in the past two months, while the full year estimate has inched up by 0.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Whirlpool is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #2, the stock belongs to an industry which is ranked among the Bottom 29%, which indicates that broader factors are not favorable for the company.
In fact, over the past two years, the Zacks Household Appliances industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Should Value Investors Consider Whirlpool Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Whirlpool Corporation (WHR - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Whirlpool has a trailing twelve months PE ratio of 13.08, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.93. If we focus on the stock’s long-term PE trend, the current level puts Whirlpool’s current PE ratio below its mid-point over the past five years.
Further, the stock’s PE compares just favorably with the Zacks classified Household Appliances sector’s trailing twelve months PE ratio, which stands at 13.32. At the very least, this indicates that the stock is somewhat undervalued right now, compared to its peers.
We should also point out that Whirlpool has a forward PE ratio (price relative to this year’s earnings) of just 11.62, so it is fair to say that a slightly more value-oriented path may be ahead for Whirlpool stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Whirlpool has a P/S ratio of about 0.67. This is significantly lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Whirlpool currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Whirlpool a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Whirlpool is just 0.72, a level that is far lower than the industry average of 1.10. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, WHR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Whirlpool might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘F’. This gives WHR a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending up. The current quarter has seen one estimate go higher in the past sixty days compared to none lower, while the full year estimate has seen one upward and no downward revision in the same time period.
This has had a positive impact on the consensus estimate though as the current quarter consensus estimate has risen by 5% in the past two months, while the full year estimate has inched up by 0.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Whirlpool Corporation Price and Consensus
Whirlpool Corporation Price and Consensus | Whirlpool Corporation Quote
This somewhat bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Whirlpool is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #2, the stock belongs to an industry which is ranked among the Bottom 29%, which indicates that broader factors are not favorable for the company.
In fact, over the past two years, the Zacks Household Appliances industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>