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Will Strong Demand Continue to Bolster Whirlpool (WHR) in 2021?

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Being one of the leading manufacturers and marketers of home appliances and related products, Whirlpool Corporation (WHR - Free Report) has been benefiting from the spike in demand for kitchen and home appliances as consumers continue to invest in home upgrades with increased stay-at-home practices. Additionally, the company is gaining from the high demand for its HEPA Air Purifiers that are capable of removing 99.97% of particles from the air. Further, the ongoing digital transformation, as consumers adopt online shopping for purchasing electronics, bodes well.

Driven by such upsides, the company delivered impressive third-quarter 2020 results, wherein earnings and sales improved year over year. This marked the ninth straight quarter of earnings beat for the company. Moreover, the top line surpassed the Zacks Consensus Estimate for the second consecutive quarter. Strength in Latin America and EMEA regions along with solid demand for home appliances contributed to quarterly growth.

Encouragingly, management revised its sales projection and reinstate earnings per share guidance for 2020. It now envisions a net sales decline of approximately 5-7% for the year compared with a fall of 10-15% mentioned earlier. Organic net sales are expected to be flat to down 1% compared with the earlier mentioned drop of 7-12%. Additionally, management anticipates adjusted earnings of $17.50-$18.00 per share for the year.

Consequently, shares of this Zacks Rank #3 (Hold) stock have gained 22.5% in a year’s time compared with the industry’s growth of 19.5%.

 


 

Apart from these, Whirlpool remains on track with its cost-curtailment plans to boost margins and enhance the liquidity position to navigate through the pandemic-induced challenges. Keeping in these lines, the company has generated cost savings of approximately $175 million in the third quarter and $350 million year to date.

Also, well chalked out actions such as curtailing structural and discretionary costs, capturing raw material deflation opportunity, effectively managing working capital and syncing supply chain, and labor levels with demand are said to have generated cost savings of more than $500 million in 2020.

However, it witnessed sluggishness across North America and Asia regions. Moreover, weak demand in the Asia region resulted in negative EBIT in China, which, in turn, hurt margins in the Asia business. Notably, segment operating margin contracted 60 basis points to 1.8% in third-quarter 2020.

Bottom Line

With enhanced direct-to-consumer capabilities, growing customer demand for home and kitchen products as well as stringent cost-cutting measures, the company remains well-positioned to stay afloat amid this crisis. Topping it, a VGM Score of A and a long-term earnings growth rate of 7.3% reflect its inherent strength.

Stocks to Consider

Spectrum Brands (SPB - Free Report) has a long-term earnings growth rate of 18.3%. Currently, it has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Crocs (CROX - Free Report) has a long-term earnings growth rate of 15% and it presently has a Zacks Rank #2.

Deckers Outdoor Corporation (DECK - Free Report) currently has a long-term earnings growth rate of 18.6% and a Zacks Rank #2.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>