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Bear of the Day: Whirlpool (WHR)

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One of the biggest names in kitchen and home appliances, Whirlpool Corp. (WHR - Free Report) markets and distributes various products under popular brand names like Whirlpool, Maytag, KitchenAid, Jenn-Air, and Amana, among may others. The company sells its products, which range from washers and dryers to stand mixers, to retailers, distributors, dealers, builders, and other manufacturers.

Whirlpool’s recent second quarter was a disappointing one, with earnings and revenues falling short of expectations. The stock is currently sitting at a #5 (Strong Sell) on the Zacks Rank. What’s next for this appliance giant?

Disappointing Q2 Results

About a week ago, Whirlpool reported second quarter fiscal 2018 results where both its top and bottom line missed the Zacks Consensus Estimate.

Q2 “ongoing” earnings were $3.20 per share and revenues were $5.1 billion, both fall short of our consensus as well as declining year-over-year; sales were down 4.5%.

Whirlpool North American reported flat net sales of $2.8 billion, down 2.8% year-over-year, while the company’s Europe, Middle East and Africa division saw sales of $1.1 billion, falling 12.3% from the prior-year period. Whirlpool Latin America sales also declined year-over-year, but its Asia division actually increased 14.5%.

The company did provide guidance, and expects ongoing earnings in the range of $14.20 to $14.80 per share, with free cash flow of about $850 million and cash from operating activities of approximately $1.5 billion.

Earnings Outlook

Estimates took a hit in the days following the report.

For the current quarter, one analyst cut their outlook in the last 60 days (though one has upped their view for the same period), and the consensus has dipped nine cents from $4.31 to $4.20 per share.

Five analysts have revised their estimates downward for fiscal 2018, and earnings are projected to only grow about 3.4%. The consensus has decreased from $15.30 to $14.20 per share.

Looking at the next fiscal year, earnings could grow 17.5%, but the current consensus sits at $16.70 per share, falling 80 cents in the past 60 days.

Can WHR Stock Turn Things Around?

Shares of Whirlpool are down more than 22% so far this year and have slipped over 26% in the past 12 months. Compared to the S&P 500, the index has gained 5.3% and 14%, respectively.

The company is currently trading at a forward P/E of 9.2X.

Looking ahead, Whirlpool remains committed to its long-term value creation strategy, and will continue to “fully invest” in its business through a balanced approach to capital allocation. And, through positive price/mix and strong actions in EMEA, the region where its currently struggling, the company hopes to see margin expansion and better cash conversion in 2018.

For investors wanting exposure to consumer discretionary stocks, and one with more near-term potential, they should consider Libbey Inc. (LBY - Free Report) , a major supplier of glass tableware and other tabletop products for the foodservice industry. It’s a #2 (Buy) on the Zacks Rank right now, and earnings could grow over 300% for the current fiscal year.

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