We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Whirlpool Corporation (WHR - Free Report) reported mixed third-quarter 2018 results, wherein earnings beat the estimates while sales missed. With this, the company delivered a positive earnings surprise after two straight quarters of miss. However, sales marked sixth straight quarter of miss. Further, management raised the lower end of its adjusted earnings view for 2018, while trimmed all other forecasts.
Notably, the bottom line benefited from solid growth at the company’s North America segment despite sluggish industry demand and higher raw material costs coupled with a lower tax rate. Also, management announced an additional increase in cost-based price across the U.S. kitchen and Brazil home appliance divisions. Further, the company remains focused on rightsizing its soft EMEA segment.
Shares of this leading home-appliances manufacturer rose nearly 3.1% in after-hours trading yesterday, mainly owing to impressive bottom-line growth. However, this Zacks Rank #4 (Sell) stock has lost 17.5% in the past three months, wider than the industry’s 13.6% decline.
Q3 Highlights
Whirlpool delivered adjusted earnings per share of $4.55, surpassing the Zacks Consensus Estimate of $3.68. The bottom line also increased 18.8% from $3.83 per share earned in the year-ago quarter. On a GAAP basis, the company reported earnings per share of $3.22 compared with $3.72 in the prior-year quarter.
Sales of $5,326 million dropped nearly 1.7% from $5,418 million registered in third-quarter 2017. Additionally, the top line fell short of the Zacks Consensus Estimate of $5,443 million. However, sales grew 1.5% on a currency-neutral basis.
Adjusted operating profit (EBIT) declined 6.5% to $332 million from $355 million in the year-ago quarter. Also, operating margin contracted 40 basis points (bps) to 6.2% due to raw material inflation, unit-volume declines and increased freight expenses. These were somewhat compensated with favorable product price/mix and restructuring benefits.
Whirlpool Corporation Price, Consensus and EPS Surprise
Sales from North America went up 3.4% to $3 billion, while the same grew 5.3% on a currency-neutral basis. Adjusted operating profit margin expanded 20 bps to 12% as gains from favorable product price/mix were partly negated by raw material inflation, tariffs and increased freight costs. In dollar terms, operating profit rose 7.1% to $360 million.
Sales from Latin America declined 9.1% year over year to $878 million. Excluding currency translations, it edged up 1.8%. Adjusted operating margin of 7% expanded 130 bps, mainly owing to higher unit volumes and favorable product price/mix. These were somewhat offset by increased raw material costs. In dollar terms, operating income grew 10.9% to $61 million.
Sales from EMEA declined 15.4% to $1.1 billion. On a currency-neutral basis, the metric dropped 7.6%. Whirlpool incurred operating loss of $39 million in the third quarter, much wider than the operating loss of $2 million in the year-ago quarter. This can be attributed to raw material inflation and unit-volume declines, which were somewhat offset by gains from product price/mix and restructuring.
Sales from Asia dropped 9.1% to $339 million from the prior-year quarter number. Excluding currency effects, revenues also dipped 4.3%. Moreover, the segment reported operating profit of $13 million, up 44% from the year-ago period. Also, operating margin expanded 140 bps to 3.8%. The improvement was driven by gains from product price/mix and fixed cost takeout, partly offset by higher raw material costs and lower unit volumes.
Financial Position
Whirlpool had cash and cash equivalents of $1,032 million as of Sep 30, 2018, and long-term debt of $4,768 million.
The company used $615 million cash in operating activities in the nine months of 2018 and reported negative free cash flow of $874 million. Capital expenditures for the nine-month period (ended Sep 30) totaled $330 million.
During the nine months of 2018, Whirlpool bought back shares worth $1,102 million and paid dividends of $232 million. The company expects to continue buying back shares through the rest of 2018 as it remains committed to its balanced capital-allocation approach.
Guidance
Following the mixed quarterly performance, management updated the guidance for 2018. Markedly, Whirlpool trimmed its GAAP forecast but raised the lower end of the adjusted earnings per share view. It now envisions adjusted earnings per share in the range of $14.50-$14.80 compared with $14.20-$14.80 projected earlier. On a GAAP basis, it now anticipates loss per share of $2.60-$2.90 against earnings of 15-75 cents per share forecasted previously.
The company also trimmed its operating cash flow and free cash flow forecasts for 2018. It now anticipates generating operating cash flow of roughly $1.2 billion compared with the previous guidance of $1.5 billion. Free cash flow is now expected to be $600 million compared with the prior view of $850 million. This guidance includes restructured cash outlays of approximately $300 million, pension contributions of $350 million and capital expenditures of $625 million related to free cash flows.
Better-Ranked Stocks in the Consumer Discretionary Space
Columbia Sportswear Company (COLM - Free Report) delivered an average earnings beat of 79.3% in the preceding four quarters and carries a Zacks Rank #1.
Ralph Lauren Corporation (RL - Free Report) , also a Zacks Rank #2 (Buy) stock, has an impressive long-term earnings growth rate of 9.6%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Whirlpool (WHR) Q3 Earnings Beat, Sales Miss, Revises View
Whirlpool Corporation (WHR - Free Report) reported mixed third-quarter 2018 results, wherein earnings beat the estimates while sales missed. With this, the company delivered a positive earnings surprise after two straight quarters of miss. However, sales marked sixth straight quarter of miss. Further, management raised the lower end of its adjusted earnings view for 2018, while trimmed all other forecasts.
Notably, the bottom line benefited from solid growth at the company’s North America segment despite sluggish industry demand and higher raw material costs coupled with a lower tax rate. Also, management announced an additional increase in cost-based price across the U.S. kitchen and Brazil home appliance divisions. Further, the company remains focused on rightsizing its soft EMEA segment.
Shares of this leading home-appliances manufacturer rose nearly 3.1% in after-hours trading yesterday, mainly owing to impressive bottom-line growth. However, this Zacks Rank #4 (Sell) stock has lost 17.5% in the past three months, wider than the industry’s 13.6% decline.
Q3 Highlights
Whirlpool delivered adjusted earnings per share of $4.55, surpassing the Zacks Consensus Estimate of $3.68. The bottom line also increased 18.8% from $3.83 per share earned in the year-ago quarter. On a GAAP basis, the company reported earnings per share of $3.22 compared with $3.72 in the prior-year quarter.
Sales of $5,326 million dropped nearly 1.7% from $5,418 million registered in third-quarter 2017. Additionally, the top line fell short of the Zacks Consensus Estimate of $5,443 million. However, sales grew 1.5% on a currency-neutral basis.
Adjusted operating profit (EBIT) declined 6.5% to $332 million from $355 million in the year-ago quarter. Also, operating margin contracted 40 basis points (bps) to 6.2% due to raw material inflation, unit-volume declines and increased freight expenses. These were somewhat compensated with favorable product price/mix and restructuring benefits.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation Price, Consensus and EPS Surprise | Whirlpool Corporation Quote
Regional Performance
Sales from North America went up 3.4% to $3 billion, while the same grew 5.3% on a currency-neutral basis. Adjusted operating profit margin expanded 20 bps to 12% as gains from favorable product price/mix were partly negated by raw material inflation, tariffs and increased freight costs. In dollar terms, operating profit rose 7.1% to $360 million.
Sales from Latin America declined 9.1% year over year to $878 million. Excluding currency translations, it edged up 1.8%. Adjusted operating margin of 7% expanded 130 bps, mainly owing to higher unit volumes and favorable product price/mix. These were somewhat offset by increased raw material costs. In dollar terms, operating income grew 10.9% to $61 million.
Sales from EMEA declined 15.4% to $1.1 billion. On a currency-neutral basis, the metric dropped 7.6%. Whirlpool incurred operating loss of $39 million in the third quarter, much wider than the operating loss of $2 million in the year-ago quarter. This can be attributed to raw material inflation and unit-volume declines, which were somewhat offset by gains from product price/mix and restructuring.
Sales from Asia dropped 9.1% to $339 million from the prior-year quarter number. Excluding currency effects, revenues also dipped 4.3%. Moreover, the segment reported operating profit of $13 million, up 44% from the year-ago period. Also, operating margin expanded 140 bps to 3.8%. The improvement was driven by gains from product price/mix and fixed cost takeout, partly offset by higher raw material costs and lower unit volumes.
Financial Position
Whirlpool had cash and cash equivalents of $1,032 million as of Sep 30, 2018, and long-term debt of $4,768 million.
The company used $615 million cash in operating activities in the nine months of 2018 and reported negative free cash flow of $874 million. Capital expenditures for the nine-month period (ended Sep 30) totaled $330 million.
During the nine months of 2018, Whirlpool bought back shares worth $1,102 million and paid dividends of $232 million. The company expects to continue buying back shares through the rest of 2018 as it remains committed to its balanced capital-allocation approach.
Guidance
Following the mixed quarterly performance, management updated the guidance for 2018. Markedly, Whirlpool trimmed its GAAP forecast but raised the lower end of the adjusted earnings per share view. It now envisions adjusted earnings per share in the range of $14.50-$14.80 compared with $14.20-$14.80 projected earlier. On a GAAP basis, it now anticipates loss per share of $2.60-$2.90 against earnings of 15-75 cents per share forecasted previously.
The company also trimmed its operating cash flow and free cash flow forecasts for 2018. It now anticipates generating operating cash flow of roughly $1.2 billion compared with the previous guidance of $1.5 billion. Free cash flow is now expected to be $600 million compared with the prior view of $850 million. This guidance includes restructured cash outlays of approximately $300 million, pension contributions of $350 million and capital expenditures of $625 million related to free cash flows.
Better-Ranked Stocks in the Consumer Discretionary Space
lululemon athletica inc. (LULU - Free Report) pulled off an average positive earnings surprise of 19.2% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Columbia Sportswear Company (COLM - Free Report) delivered an average earnings beat of 79.3% in the preceding four quarters and carries a Zacks Rank #1.
Ralph Lauren Corporation (RL - Free Report) , also a Zacks Rank #2 (Buy) stock, has an impressive long-term earnings growth rate of 9.6%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>