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Why Is Whirlpool (WHR) Up 2.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Whirlpool (WHR - Free Report) . Shares have added about 2.2% 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 drivers.
Whirlpool posted strong second-quarter 2021 results and significantly raised the outlook for the year. Both top and bottom lines beat the Zacks Consensus Estimate and improved year over year in the second quarter. The company’s strong performance in the quarter was led by strong customer demand and the execution of its cost-based pricing initiatives. It reported double-digit revenue growth, EBIT margin expansion across all regions and substantial cash flow generation, which reflected its strength in a tough environment.
The company delivered adjusted earnings of $6.64 per share that increased substantially from $2.07 a share earned in the year-earlier quarter. This was driven by robust revenue growth and the execution of its cost-based price increases. The bottom line also surpassed the Zacks Consensus Estimate of $5.89, delivering a 12th straight quarterly beat.
Net sales of $5,324 million advanced 31.7% from the year-ago period and outpaced the Zacks Consensus Estimate of $4,869 million, marking the fifth successive beat. Sustained consumer demand and cost-based pricing efforts aided the top line.
Adjusted operating profit (“EBIT”) of $607 million increased significantly from $204 million in the year-ago quarter. Adjusted operating margin expanded 640 basis points to 11.4%, with all regions registering meaningful margin expansions.
Regional Performance
Net sales from North America increased 21.6% year over year to $3,042 million, driven by sustained consumer demand. Excluding the currency impact, sales for the region rose 20.5%. The segment’s EBIT surged 79.7% to $557 million, while the EBIT margin expanded 590 basis points to 18.3% on robust go-to-market actions.
Net sales from EMEA advanced 49.5% to $1,250 million. Excluding the currency impacts, sales for the region rose 38.8%. Revenues were mainly aided by robust double-digit volume growth across all key countries. The segment’s EBIT of $31 million improved significantly from a loss of $66 million reported in the year-ago period. EBIT margin was 2.5% on higher sales and disciplined cost-management initiatives.
Net sales from Latin America grew 75.8% to $763 million, driven by solid industry demand in Brazil and Mexico. Excluding the currency impacts, sales for the region advanced 73.3%. The segment’s EBIT of $74 million surged from $11 million in the year-ago period. EBIT margin expanded 720 basis points to 9.7%, courtesy of higher cost-based prices and strong demand, which helped mitigate currency headwinds.
Net sales from Asia dipped 0.7% to $269 million from the prior-year quarter’s reported figure, owing to the partial divestiture in Whirlpool China and COVID-related closures in India. Excluding the currency impacts, sales for the region were down 4.1%. The segment’s EBIT of $4 million reflected an increase from a loss of $18 million reported in the year-ago period. The segment’s EBIT margin expansion was led by cost-based price increases and cost-productivity actions as well as early signs of recovery in India in June.
Financial Position
As of Jun 30, 2021, Whirlpool had cash and cash equivalents of $2,968 million, long-term debt of $5,001 million, and stockholders’ equity of $4,951 million, excluding non-controlling interest of $134 million.
As of the end of the second quarter, Whirlpool generated cash of $646 million from operating activities, while delivering a free cash flow of $769 million. The company delivered positive cash flow on the back of robust net earnings and disciplined working capital management. Free cash flow also benefited from the completion of a partial tender offer for Whirlpool China and the divestiture of the Turkey subsidiary. Capital expenditure was $184 million for the six months ended Jun 30, 2021.
Outlook
Backed by the strength in its business due to robust consumer demand and gains from cost-based pricing actions, management substantially raised the 2021 outlook. Whirlpool now envisions net sales (excluding currency impact) growth of 16% for 2021 compared with 13% growth mentioned earlier.
GAAP earnings per share are now forecast to be $26.95 compared with $23.10-$24.10 mentioned earlier. It also raised the adjusted earnings per share outlook to $26.00 versus $22.50-$23.50 mentioned previously.
The company raised expectations for cash provided by operating activities to $1.95 from the earlier mentioned $1.70 billion. It also increased the free cash flow guidance to $1.70 billion from $1.25 billion stated earlier. GAAP tax rate is now anticipated at 22-24% compared with 24-26% mentioned earlier. Adjusted tax rate is expected to be 24-26%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.2% due to these changes.
VGM Scores
At this time, Whirlpool has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Whirlpool has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Whirlpool (WHR) Up 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Whirlpool (WHR - Free Report) . Shares have added about 2.2% 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 drivers.
Whirlpool Beats Q2 Earnings & Sales Estimates, Ups View
Whirlpool posted strong second-quarter 2021 results and significantly raised the outlook for the year. Both top and bottom lines beat the Zacks Consensus Estimate and improved year over year in the second quarter. The company’s strong performance in the quarter was led by strong customer demand and the execution of its cost-based pricing initiatives. It reported double-digit revenue growth, EBIT margin expansion across all regions and substantial cash flow generation, which reflected its strength in a tough environment.
The company delivered adjusted earnings of $6.64 per share that increased substantially from $2.07 a share earned in the year-earlier quarter. This was driven by robust revenue growth and the execution of its cost-based price increases. The bottom line also surpassed the Zacks Consensus Estimate of $5.89, delivering a 12th straight quarterly beat.
Net sales of $5,324 million advanced 31.7% from the year-ago period and outpaced the Zacks Consensus Estimate of $4,869 million, marking the fifth successive beat. Sustained consumer demand and cost-based pricing efforts aided the top line.
Adjusted operating profit (“EBIT”) of $607 million increased significantly from $204 million in the year-ago quarter. Adjusted operating margin expanded 640 basis points to 11.4%, with all regions registering meaningful margin expansions.
Regional Performance
Net sales from North America increased 21.6% year over year to $3,042 million, driven by sustained consumer demand. Excluding the currency impact, sales for the region rose 20.5%. The segment’s EBIT surged 79.7% to $557 million, while the EBIT margin expanded 590 basis points to 18.3% on robust go-to-market actions.
Net sales from EMEA advanced 49.5% to $1,250 million. Excluding the currency impacts, sales for the region rose 38.8%. Revenues were mainly aided by robust double-digit volume growth across all key countries. The segment’s EBIT of $31 million improved significantly from a loss of $66 million reported in the year-ago period. EBIT margin was 2.5% on higher sales and disciplined cost-management initiatives.
Net sales from Latin America grew 75.8% to $763 million, driven by solid industry demand in Brazil and Mexico. Excluding the currency impacts, sales for the region advanced 73.3%. The segment’s EBIT of $74 million surged from $11 million in the year-ago period. EBIT margin expanded 720 basis points to 9.7%, courtesy of higher cost-based prices and strong demand, which helped mitigate currency headwinds.
Net sales from Asia dipped 0.7% to $269 million from the prior-year quarter’s reported figure, owing to the partial divestiture in Whirlpool China and COVID-related closures in India. Excluding the currency impacts, sales for the region were down 4.1%. The segment’s EBIT of $4 million reflected an increase from a loss of $18 million reported in the year-ago period. The segment’s EBIT margin expansion was led by cost-based price increases and cost-productivity actions as well as early signs of recovery in India in June.
Financial Position
As of Jun 30, 2021, Whirlpool had cash and cash equivalents of $2,968 million, long-term debt of $5,001 million, and stockholders’ equity of $4,951 million, excluding non-controlling interest of $134 million.
As of the end of the second quarter, Whirlpool generated cash of $646 million from operating activities, while delivering a free cash flow of $769 million. The company delivered positive cash flow on the back of robust net earnings and disciplined working capital management. Free cash flow also benefited from the completion of a partial tender offer for Whirlpool China and the divestiture of the Turkey subsidiary. Capital expenditure was $184 million for the six months ended Jun 30, 2021.
Outlook
Backed by the strength in its business due to robust consumer demand and gains from cost-based pricing actions, management substantially raised the 2021 outlook. Whirlpool now envisions net sales (excluding currency impact) growth of 16% for 2021 compared with 13% growth mentioned earlier.
GAAP earnings per share are now forecast to be $26.95 compared with $23.10-$24.10 mentioned earlier. It also raised the adjusted earnings per share outlook to $26.00 versus $22.50-$23.50 mentioned previously.
The company raised expectations for cash provided by operating activities to $1.95 from the earlier mentioned $1.70 billion. It also increased the free cash flow guidance to $1.70 billion from $1.25 billion stated earlier. GAAP tax rate is now anticipated at 22-24% compared with 24-26% mentioned earlier. Adjusted tax rate is expected to be 24-26%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.2% due to these changes.
VGM Scores
At this time, Whirlpool has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Whirlpool has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.