For Immediate Release
Chicago, IL – August 21, 2020 – Zacks Equity Research Shares of Whirlpool Corporation (WHR - Free Report) as the Bull of the Day, The ODP Corporation (ODP - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onBest Buy Co., Inc. (BBY - Free Report) .
Here is a synopsis of all three stocks:
Founded in 1955, Whirlpool is one of the largest manufacturers of home appliances in the world, making products in 14 different countries and markets. Its portfolio is big and varied, and includes laundry appliances, refrigerators and freezers, cooking appliances, and smaller household appliances like dishwashers and mixers.
Q2 Earnings Recap
Back in July, WHR popped as much as 10% after the company released better-than-expected second quarter earnings.
Net sales hit $4 billion on top of adjusted earnings of $2.15 per share, and while both the top and bottom line declined sharply year-over-year, both came in ahead of Wall Street expectations.
Breaking sales down by region, North America was only down 12.5% compared to the year-ago quarter, but Asia and Latin America were hit extremely hard, with sales falling 37% and 51%, respectively. Consumers possible using their stimulus checks to buy big appliances likely helped bolster North American sales.
WHR’s outlook also improved, and the company now expects the overall drop in sales for the fiscal year to be between 10% and 15%, a big improvement from the previous sales drop between 13% and 18%.
CEO Marc Bitzer said that WHR delivered “a solid Q2 performance despite the far reaching impact of COVID-19 on our business is the result of the decisive actions we took throughout the quarter and ultimately demonstrates the resilience of our business model."
WHR is Soaring
Since March 23, shares of WHR have surged over 146% compared to the S&P 500’s 46.7% increase. Earnings estimates have been rising too, and WHR is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, five analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up well over two dollars to $12.50 per share. Earnings are expected to fall almost 22% compared to the prior year period, but 2021 looks strong, and earnings should see double-digit year-over-year growth.
WHR is also a dividend stock, and shares currently yield a solid 2.6%; its payout ratio is only 36%, providing shareholders a good buffer in these uncertain economic times.
Investors were rightfully optimistic after WHR’s Q2 earnings report, as the appliance giant showed strengthening demand during the height of the coronavirus pandemic.
If you’re an investor searching for a consumer discretionary stock to add to your portfolio, make sure to keep WHR on your shortlist.
Office Depot, now known as The ODP Corporation, is one of the leading providers of business services, products and digital workplace technology solutions around the globe. On July 1, the company went through a reorganization, and created a holding company to help organize all of its various businesses.
Q2 Earnings Disappoint
Shares of ODP fell as much as 10% after the company reported Q2 earnings on August 5.
Revenue fell 17% year-over-year to $2.2 billion, while operating income fell to a huge $439 million loss for the quarter (compared to a $24 million loss in Q2 2019).
Stripping out all of the one-time charges, ODP’s adjusted loss came to $0.07 per share; Wall Street had been anticipating a profit of $0.08 a share.
But, the company did end the quarter with $1.5 billion in total available liquidity, including $762 million in cash.
“While the business environment in North America is still recovering, our strong balance sheet and asset base provides an excellent foundation to navigate the challenges and pursue profitable growth,” said CEO Gerry Smith in the earnings release.
ODP is now a Zacks Rank #5 (Strong Sell).
One analyst cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 66 cents to $3.79 per share; earnings are expected to fall about 7.5% for fiscal 2020.
Shares have actually gained more than 46% since March 23. The company recently authorized a reverse stock split, choosing a 1-for-10 ratio; this cut the number of shares from 800 million to 80 million. For investors, this means that for every 10 shares owned, they’ll now have only a single share.
Even though the stock spiked on this news, it’s not a good sign for ODP. The reverse split doesn’t change the company’s current situation, and actually hints at a cloud of uncertainty.
ODP will likely have a long, hard road ahead of it. The Covid-19 pandemic has not been helpful to its structural plans—the company is seeking to shift away from brick-and-mortar stores to a business-to-business model—and investors may want to stay on the sidelines until their growth plans become clearer.
Investors who are interested in adding a retail stock to their portfolio could consider Best Buy, a company that specializes in consumer electronics and home office products. BBY is a #2 (Buy) on the Zacks Rank, and shares have skyrocketed 114.5% since mid-March.
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