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Bull of the Day: Whirlpool (WHR)

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Whirlpool (WHR - Free Report) is a Zacks Rank #1 (Strong Buy) that is one of the largest manufacturers of home appliances in the world. The company’s portfolio includes laundry appliances, refrigerators, freezers, cooking appliances and compressors. Brands include popular names like Whirlpool, KitchenAid, Maytag, Consul, JeenAir and Amana.  

The stock has struggled for five years after earnings missed expectations consistently. However, a change in that trend is bringing in investors that see a breakout forming in the stock.

Surprise Q3 Beat

Whirlpool reported earnings in late October, seeing a 68% beat on EPS and exceeding revenue expectations. The company raised FY20 GAAP and guided FY20 higher.

The beat was the ninth straight surprise to the upside after years of struggling to make numbers from 2016-19. Chairman and CEO Marc Bitzer had some comments on the quarter:

“From the outset of this global crisis, we have taken decisive actions to weather the uncertainty and win in the eventual economic recovery. Our results this quarter are a testament to those actions, the exceptional execution by our employees, and the resiliency of our long-term strategy. Looking ahead, while uncertainty remains, our Q3 performance serves as an additional proof-point that we are well-positioned to capitalize on the structural improvements in housing and consumer trends, and firmly demonstrates the viability of our long-term shareholder value creation strategy.”

Estimates

Analysts like the quarter, with many raising their price targets for the stock. Estimates are also being raised, with next quarter shooting up 40% over the last 60 days, from $3.23 to $4.54. Additionally, the next year looks great with a 42% jump in in estimates over the same time frame.  

The Technical Take

All the way back in 2014, the stock was one of the hottest on Wall Street. However, since the run above $200 that year, the stock chopped around the $150-175 level as earnings continued to under impress.

When the Chinese tariffs started to hit, the stock fell to $100 and then when the pandemic hit, below $100. However, COVID actually turned out to be a tailwind for the company as people looked to improve their quality of life in the home.

After the stock made a low under $64 in March, it rallied all the way back to the $150 level and has since made its way up to $200, only about 10% from all time highs.

The stocks 200-day is at $147, which seems out of reach. However, the 50-day MA has offered support as of late at the $190 level. Looking at the Fibs, if we draw the 2020 highs to lows, we get at 161.8% target as $220, which would take out all-time highs.

 In Summary

Whirlpool has finally turned the trend and performed very well through the pandemic. All-time highs are in site and should be taken out soon. Investors should watch if this earnings trend can continue after the economy normalize. If so, long-term investors are likely rewarded and the trend continues.

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