A month has gone by since the last earnings report for Whirlpool (
WHR Quick Quote WHR - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Whirlpool due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Whirlpool Beats on Q1 Earnings & Sales, Raises '21 View
Whirlpool posted impressive first-quarter 2021 results and raised outlook for the year. Both the top and bottom lines not only beat the Zacks Consensus Estimate, but also improved year over year in the first quarter. Markedly, the company witnessed significant year-over-year revenue and margin expansion in North America, Latin America, and Europe, Middle East and Africa (EMEA) regions.
Clearly, the quarterly performance reflects the company’s agility and resilience in dealing with shortages and inflationary pressure. Also, robust consumer demand and cost-based pricing initiatives aided results and helped management increase guidance. The appliance maker delivered adjusted earnings of $7.20 per share that increased substantially from $2.86 a share earned in the year-earlier quarter. This was driven by increased volumes and solid execution of go-to-market endeavors. Notably, the bottom line also surpassed the Zacks Consensus Estimate of $5.38, delivering an 11th straight quarterly beat. Net sales of $5,358 million rose 23.9% from the year-ago period and outpaced the Zacks Consensus Estimate of $4,875 million, marking the fourth successive beat. Sustained global industry demand and cost-based pricing efforts aided the top line. Further, organic net sales increased 24.2% to $5,370 million. Notably, the company saw sales growth in all regions. Adjusted operating profit (“EBIT”) came in at $664 million, up significantly from $269 million in the year-ago quarter. We note that the adjusted operating margin expanded 620 basis points to 12.4% with all regions registering meaningful margin expansions. Regional Performance
Net sales from
North America increased 19.8% year over year to $3,044 million, driven by encouraging consumer demand. Excluding the currency impact, sales for the region rose 19.3%. Markedly, the segment’s EBIT surged 98.4% to $607 million while the EBIT margin expanded 790 basis points to 19.9% on robust go-to-market actions. Net sales from EMEA jumped 33.2% to $1,171 million. Excluding the currency impact, sales for the region rose 25% as volume growth surpassed industry demand. Notably, the segment’s EBIT of $21 million improved significantly from a loss of $15 million in the year-ago period. Also, EBIT margin came in at 1.8% on higher sales and disciplined cost-control actions. Net sales from Latin America grew 18.4% to $732 million, driven by solid industry demand in Brazil and Mexico. Excluding the currency impact, sales for the region advanced 35.4%. The segment’s EBIT of $62 million surged from $31 million in the year-ago period. Impressively, the EBIT margin expanded 340 basis points to 8.5%, courtesy of higher cost-based prices and strong demand that helped mitigate currency headwinds. Net sales from Asia increased 42.7% to $411 million from the prior-year quarter’s reported figure, owing to solid demand in the region and share gains in China. Excluding the currency impact, sales for the region were up 39.6%. The segment’s EBIT came in at $21 million, reflecting a sharp rise from a loss of $16 million reported in the year-ago period. The segment’s EBIT margin expansion in India and China was buoyed by go-to-market and stringent cost productivity efforts. Financial Position
As of Mar 31, 2021, Whirlpool had cash and cash equivalents of $2,447 million, long-term debt of $4,982 million and stockholders’ equity of $4,222 million, excluding non-controlling interest of $917 million. The company delivered long-term gross debt leverage goal of 2.0x.
At the end of the first quarter, Whirlpool generated cash of $182 million from operating activities while delivering free cash flow of $132 million. The company delivered positive cash flow on the back of robust net earnings and disciplined working capital management. Further, capital expenditures were $73 million for the same period. Whirlpool also accelerated its shareholder-friendly moves. The company hiked its quarterly dividend by 12% to $1.40 per share versus the prior payout of $1.25 per share. It has also raised share repurchase authorization by $2 billion to $2.4 billion. Outlook
Driven by a strong quarterly performance, management raised full-year 2021 outlook. Whirlpool now envisions net sales (excluding currency impact) growth of approximately 13% for 2021 versus 6% rise predicted earlier.
Meanwhile, the company raised expectations for cash provided by operating activities to $1.70 billion from the earlier view of $1.55 billion, and increased free cash flow guidance to $1.25 billion from $1 billion or more. Moreover, GAAP and adjusted tax rate is still anticipated at 24-26%. Further, GAAP earnings per share is now forecast to be $23.10-$24.10 compared with $17.80-$18.80 as guided earlier. It also raised adjusted earnings per share outlook to the $22.50-$23.50 range from $19.00-$20.00 projected previously. How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 10.97% due to these changes.
Currently, Whirlpool has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Whirlpool has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.