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Should Value Investors Pick Whirlpool (WHR) Stock At Present?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Whirlpool (WHR - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Whirlpool has a trailing twelve months PE ratio of 8.2, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 24. If we focus on the long-term PE trend, its current PE level puts it below its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 69.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers
Image Source: Zacks Investment Research
We should also point out that Whirlpool has a forward PE ratio (price relative to this year’s earnings) of just 8.6, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Whirlpool has a P/S ratio of about 0.6. This is a lower than the S&P 500 average, which comes in at 5 right now. We can see in the chart below, this is above the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Whirlpool currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Whirlpool a solid choice for value investors, and another key metric makes this pretty clear too.
For example, the PEG ratio comes in at 1.1, (which is somewhat better than the industry average of 1.3). Clearly, WHR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Whirlpool might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of F. This gives WHR a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen three estimates go higher and one lower in the past sixty days, while that for full-year 2022 has seen three up and none down in the same time period.
As a result, the consensus estimate for the current year has improved by 0.5% while the same for full-year 2022 has risen 3.7%in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite having a bullish trend, WHR sports a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Whirlpool is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 43%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
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Should Value Investors Pick Whirlpool (WHR) Stock At Present?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Whirlpool (WHR - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Whirlpool has a trailing twelve months PE ratio of 8.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 24. If we focus on the long-term PE trend, its current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 69.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers
We should also point out that Whirlpool has a forward PE ratio (price relative to this year’s earnings) of just 8.6, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Whirlpool has a P/S ratio of about 0.6. This is a lower than the S&P 500 average, which comes in at 5 right now. We can see in the chart below, this is above the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Whirlpool currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Whirlpool a solid choice for value investors, and another key metric makes this pretty clear too.
For example, the PEG ratio comes in at 1.1, (which is somewhat better than the industry average of 1.3). Clearly, WHR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Whirlpool might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of F. This gives WHR a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen three estimates go higher and one lower in the past sixty days, while that for full-year 2022 has seen three up and none down in the same time period.
As a result, the consensus estimate for the current year has improved by 0.5% while the same for full-year 2022 has risen 3.7%in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Whirlpool Corporation Price and Consensus
Whirlpool Corporation price-consensus-chart | Whirlpool Corporation Quote
Despite having a bullish trend, WHR sports a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Whirlpool is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 43%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.