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Whirlpool (WHR) Down 2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Whirlpool (WHR - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Whirlpool due for a breakout? 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 Q4 Earnings Beat, Sales Increase Y/Y
Whirlpool posted fourth-quarter 2023 results, wherein sales and earnings beat the Zacks Consensus Estimate. The company’s top line also improved year over year. Results benefited from market share growth, industry recovery and gains from cost takeout actions, offset by an unfavorable price/mix.
The appliance maker reported fourth-quarter adjusted earnings of $3.85 per share, surpassing the Zacks Consensus Estimate of earnings of $3.64 per share but down 1% from the year-ago quarter.
Net sales of $5,088 million beat the consensus estimate of $5,052 million and improved 3.4% from the year-ago quarter. Excluding the unfavorable impacts of foreign exchange, net sales were $4,999 million, up 1.6% year over year.
The gross profit for fourth-quarter 2023 was $792 million, up 22.8% from the $645 million reported in the year-ago quarter. The gross margin improved 250 basis points (bps) year over year to 15.6%.
The ongoing EBIT of $266 million improved 55.6% from $171 million in the year-ago quarter. The ongoing EBIT margin of 5.2% expanded 170 bps year over year, backed by cost takeout endeavors.
Regional Performances
Net sales for the North America segment rose 1.3% year over year to $2,881 million. Excluding currency, net sales improved 1.3% year over year, driven by 1 point of share gains and higher industry demand, partly offset by adverse price/mix. The segment’s EBIT increased 45.8% year over year to $242 million, while the EBIT margin expanded 260 bps to 8.4% on gains from cost takeout initiatives, somewhat negated by an adverse price/mix.
Net sales for the EMEA segment were down 3.2% year over year to $995 million. Excluding currency, sales in the region dipped 8.3% year over year on persistent softness in demand trends in Europe, partly negated by a favorable price/mix. The segment’s EBIT of $33 million improved from the operating loss of $4 million reported in the year-ago quarter. The EBIT margin was 3.3% against a negative 0.4% in the prior-year quarter, mainly benefiting from cost takeout actions and assets held for sale.
Net sales from Latin America rose 17.2% year over year to $974 million. Excluding currency, the segment’s sales rose 12.5% year over year due to industry recovery in Brazil and Mexico, and share gains in Brazil. The segment’s EBIT of $58 million advanced 18.4% year over year. The EBIT margin expanded 10 bps year over year to 6%, aided by cost takeout actions.
Net sales in Asia grew 8.7% year over year to $238 million. Excluding the currency impacts, sales for the region were up 10.1% due to higher volumes and better industry trends. The segment’s EBIT of $3 million reflected a 50% plunge from the $6 million reported in the year-ago quarter. The segment’s EBIT margin of 1.3% contracted from 2.7% in the prior-year quarter due to the adverse price/mix, partly negated by cost takeout actions.
Other Financial Details
During 2023, Whirlpool provided cash of $915 million from operating activities. It reported a free cash outflow of $366 million. WHR incurred a capital expenditure of $549 million in the same period. The company returned $384 million in cash to shareholders as dividends in 2023.
Outlook
Whirlpool issued guidance for 2024. It forecasts net sales of $16.9 billion for 2024, suggesting a 13.1% decline from the year-ago actual. The company anticipates an ongoing EBIT margin of 6.8%, up from 6.1% reported in 2023.
On a GAAP and ongoing basis, Whirlpool expects earnings per share of $8.50-$10.50 and $13.00-$15.00, respectively. In 2023, the company reported earnings per share, on a GAAP and ongoing basis, of $8.72 and $16.16, respectively. This includes $300-$400 million of cost actions. Management anticipates a GAAP and adjusted tax rate of 24% and 0%, respectively, for 2024.
Management expects the Europe transaction to conclude by April 2024, and the 2024 outlook consists of three months of MDA Europe's expected results (nearly $700 million of net sales and EBIT margin of 1.5%).
For 2024, cash provided by operating activities is expected to be $1.15-$1.25 billion and free cash flow is estimated to be about $550-$650 million. This includes nearly $200-$300 million of major domestic appliances in Europe cash usage in 2024. It anticipates paying dividends of roughly $400 million, subject to board approval, and lowering debt by about $500 million in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -31.16% due to these changes.
VGM Scores
At this time, Whirlpool has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Whirlpool has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Whirlpool (WHR) Down 2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Whirlpool (WHR - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Whirlpool due for a breakout? 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 Q4 Earnings Beat, Sales Increase Y/Y
Whirlpool posted fourth-quarter 2023 results, wherein sales and earnings beat the Zacks Consensus Estimate. The company’s top line also improved year over year. Results benefited from market share growth, industry recovery and gains from cost takeout actions, offset by an unfavorable price/mix.
The appliance maker reported fourth-quarter adjusted earnings of $3.85 per share, surpassing the Zacks Consensus Estimate of earnings of $3.64 per share but down 1% from the year-ago quarter.
Net sales of $5,088 million beat the consensus estimate of $5,052 million and improved 3.4% from the year-ago quarter. Excluding the unfavorable impacts of foreign exchange, net sales were $4,999 million, up 1.6% year over year.
The gross profit for fourth-quarter 2023 was $792 million, up 22.8% from the $645 million reported in the year-ago quarter. The gross margin improved 250 basis points (bps) year over year to 15.6%.
The ongoing EBIT of $266 million improved 55.6% from $171 million in the year-ago quarter. The ongoing EBIT margin of 5.2% expanded 170 bps year over year, backed by cost takeout endeavors.
Regional Performances
Net sales for the North America segment rose 1.3% year over year to $2,881 million. Excluding currency, net sales improved 1.3% year over year, driven by 1 point of share gains and higher industry demand, partly offset by adverse price/mix. The segment’s EBIT increased 45.8% year over year to $242 million, while the EBIT margin expanded 260 bps to 8.4% on gains from cost takeout initiatives, somewhat negated by an adverse price/mix.
Net sales for the EMEA segment were down 3.2% year over year to $995 million. Excluding currency, sales in the region dipped 8.3% year over year on persistent softness in demand trends in Europe, partly negated by a favorable price/mix. The segment’s EBIT of $33 million improved from the operating loss of $4 million reported in the year-ago quarter. The EBIT margin was 3.3% against a negative 0.4% in the prior-year quarter, mainly benefiting from cost takeout actions and assets held for sale.
Net sales from Latin America rose 17.2% year over year to $974 million. Excluding currency, the segment’s sales rose 12.5% year over year due to industry recovery in Brazil and Mexico, and share gains in Brazil. The segment’s EBIT of $58 million advanced 18.4% year over year. The EBIT margin expanded 10 bps year over year to 6%, aided by cost takeout actions.
Net sales in Asia grew 8.7% year over year to $238 million. Excluding the currency impacts, sales for the region were up 10.1% due to higher volumes and better industry trends. The segment’s EBIT of $3 million reflected a 50% plunge from the $6 million reported in the year-ago quarter. The segment’s EBIT margin of 1.3% contracted from 2.7% in the prior-year quarter due to the adverse price/mix, partly negated by cost takeout actions.
Other Financial Details
During 2023, Whirlpool provided cash of $915 million from operating activities. It reported a free cash outflow of $366 million. WHR incurred a capital expenditure of $549 million in the same period. The company returned $384 million in cash to shareholders as dividends in 2023.
Outlook
Whirlpool issued guidance for 2024. It forecasts net sales of $16.9 billion for 2024, suggesting a 13.1% decline from the year-ago actual. The company anticipates an ongoing EBIT margin of 6.8%, up from 6.1% reported in 2023.
On a GAAP and ongoing basis, Whirlpool expects earnings per share of $8.50-$10.50 and $13.00-$15.00, respectively. In 2023, the company reported earnings per share, on a GAAP and ongoing basis, of $8.72 and $16.16, respectively. This includes $300-$400 million of cost actions. Management anticipates a GAAP and adjusted tax rate of 24% and 0%, respectively, for 2024.
Management expects the Europe transaction to conclude by April 2024, and the 2024 outlook consists of three months of MDA Europe's expected results (nearly $700 million of net sales and EBIT margin of 1.5%).
For 2024, cash provided by operating activities is expected to be $1.15-$1.25 billion and free cash flow is estimated to be about $550-$650 million. This includes nearly $200-$300 million of major domestic appliances in Europe cash usage in 2024. It anticipates paying dividends of roughly $400 million, subject to board approval, and lowering debt by about $500 million in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -31.16% due to these changes.
VGM Scores
At this time, Whirlpool has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Whirlpool has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.