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Whirlpool's (WHR) Q1 Earnings Beat Estimates, Sales Miss
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Whirlpool Corporation (WHR - Free Report) continued with its positive earnings surprise streak for the seventh straight quarter with first-quarter 2020 results. However, net sales fell short of the Zacks Consensus Estimate for the third quarter in row. Also, both the top and bottom lines declined year over year. Nonetheless, management notified that in spite of disruptions caused by the coronavirus pandemic, the company witnessed decent margin performance in North America, Latin America and Europe, Middle East and Africa regions.
Moreover, Whirlpool has chalked out plans to protect margins and enhance liquidity position to navigate through this turbulent environment. The company is targeting more than $500 million in net cost takeout by undertaking actions such as curtailing structural and discretionary costs, capturing raw material deflation opportunity, effectively managing working capital and syncing supply chain and labor levels with demand.
These initiatives provided some cushion to the shares of this appliances maker that rose roughly 2.2% during the after-market trading session on Apr 30. We note that this Zacks Rank #3 (Hold) stock has fallen about 24%, almost in line with the industry, in the past three months.
An Insight into Q1
The company delivered adjusted earnings of $2.82 per share that surpassed the Zacks Consensus Estimate of $2.61 but declined 9.3% from the year-ago quarter’s figure of $3.11. On a GAAP basis, it reported earnings of $2.41 per share, significantly down from $7.31 registered in the prior-year period.
Net sales of $4,325 million declined 9.1% from the year-ago period and lagged the Zacks Consensus Estimate of $4,377 million. Organic net sales edged down 0.3% to $4,433 million. We note that sales declined across all regions, except North America that witnessed a marginal growth.
The coronavirus outbreak has hurt the company’s sales performance. While the impact of the same on the business is difficult to ascertain, management still envisions net sales decline of approximately 13-18% for the full year. The company projects organic net sales to decrease in the band of 10-15%.
Adjusted operating profit (EBIT) fell 10.7% to $266 million from $298 million in the year-ago quarter. We note that adjusted operating margin contracted marginally by 20 basis points to 6.1%. This can be attributed to the company’s stringent cost discipline actions that helped nearly offset COVID-19 related disruptions of about 150 basis points.
Whirlpool Corporation Price, Consensus and EPS Surprise
Net sales from North America inched up 0.2% year over year to $2,540 million. On a currency-neutral basis, sales for the region rose 0.3%. Segment’s operating profit fell 3% to $303 million, while operating margin shrunk 40 basis points to 11.9%. We note that the company’s aggressive cost actions partly offset negative price/mix.
Net sales from EMEA (Europe, Middle East and Africa) declined 12.4% to $879 million. On a currency-neutral basis, sales for the region fell 10.2%. Notably, segment’s operating loss for the quarter under review improved to $15 million from $21 million in the year-ago period courtesy of disciplined cost actions.
Net sales from Latin America plunged 29.4% to $618 million. On a currency-neutral basis, sales for the region fell 20.7%. However, the segment’s organic net sales surged 23.3% driven by share gains in Brazil. The segment reported an operating profit of $31 million, down from $45 million in the year-ago period. However, operating margin remained almost flat at 5%. Management stated that cost containment efforts helped offset unfavorable currency. The region's operating profit includes $24 million related to the Embraco compressor business.
Net sales from Asia decreased 22.3% to $288 million from the prior-year quarter’s figure thanks to COVID-19 that hurt demand in China and disrupted business activities in India. On a currency-neutral basis, sales for the region fell 20.2%. The segment reported an operating loss of $16 million against operating profit of $7 million in the prior-year period.
Financial Position
As of Mar 31, 2020, Whirlpool had cash and cash equivalents of $2,837 million, long-term debt of $4,662 million and shareholders’ equity of $3,980 million. Management highlighted that the company has roughly $2 billion available in remaining committed credit facilities. The company generated negative free cash flow of $870 million.
Netflix (NFLX - Free Report) has an expected long-term earnings growth rate of 30% and a Zacks Rank #2 (Buy).
H&R Block (HRB - Free Report) has a Zacks Rank #2 and an expected long-term earnings growth rate of 10%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Whirlpool's (WHR) Q1 Earnings Beat Estimates, Sales Miss
Whirlpool Corporation (WHR - Free Report) continued with its positive earnings surprise streak for the seventh straight quarter with first-quarter 2020 results. However, net sales fell short of the Zacks Consensus Estimate for the third quarter in row. Also, both the top and bottom lines declined year over year. Nonetheless, management notified that in spite of disruptions caused by the coronavirus pandemic, the company witnessed decent margin performance in North America, Latin America and Europe, Middle East and Africa regions.
Moreover, Whirlpool has chalked out plans to protect margins and enhance liquidity position to navigate through this turbulent environment. The company is targeting more than $500 million in net cost takeout by undertaking actions such as curtailing structural and discretionary costs, capturing raw material deflation opportunity, effectively managing working capital and syncing supply chain and labor levels with demand.
These initiatives provided some cushion to the shares of this appliances maker that rose roughly 2.2% during the after-market trading session on Apr 30. We note that this Zacks Rank #3 (Hold) stock has fallen about 24%, almost in line with the industry, in the past three months.
An Insight into Q1
The company delivered adjusted earnings of $2.82 per share that surpassed the Zacks Consensus Estimate of $2.61 but declined 9.3% from the year-ago quarter’s figure of $3.11. On a GAAP basis, it reported earnings of $2.41 per share, significantly down from $7.31 registered in the prior-year period.
Net sales of $4,325 million declined 9.1% from the year-ago period and lagged the Zacks Consensus Estimate of $4,377 million. Organic net sales edged down 0.3% to $4,433 million. We note that sales declined across all regions, except North America that witnessed a marginal growth.
The coronavirus outbreak has hurt the company’s sales performance. While the impact of the same on the business is difficult to ascertain, management still envisions net sales decline of approximately 13-18% for the full year. The company projects organic net sales to decrease in the band of 10-15%.
Adjusted operating profit (EBIT) fell 10.7% to $266 million from $298 million in the year-ago quarter. We note that adjusted operating margin contracted marginally by 20 basis points to 6.1%. This can be attributed to the company’s stringent cost discipline actions that helped nearly offset COVID-19 related disruptions of about 150 basis points.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation price-consensus-eps-surprise-chart | Whirlpool Corporation Quote
Regional Performance
Net sales from North America inched up 0.2% year over year to $2,540 million. On a currency-neutral basis, sales for the region rose 0.3%. Segment’s operating profit fell 3% to $303 million, while operating margin shrunk 40 basis points to 11.9%. We note that the company’s aggressive cost actions partly offset negative price/mix.
Net sales from EMEA (Europe, Middle East and Africa) declined 12.4% to $879 million. On a currency-neutral basis, sales for the region fell 10.2%. Notably, segment’s operating loss for the quarter under review improved to $15 million from $21 million in the year-ago period courtesy of disciplined cost actions.
Net sales from Latin America plunged 29.4% to $618 million. On a currency-neutral basis, sales for the region fell 20.7%. However, the segment’s organic net sales surged 23.3% driven by share gains in Brazil. The segment reported an operating profit of $31 million, down from $45 million in the year-ago period. However, operating margin remained almost flat at 5%. Management stated that cost containment efforts helped offset unfavorable currency. The region's operating profit includes $24 million related to the Embraco compressor business.
Net sales from Asia decreased 22.3% to $288 million from the prior-year quarter’s figure thanks to COVID-19 that hurt demand in China and disrupted business activities in India. On a currency-neutral basis, sales for the region fell 20.2%. The segment reported an operating loss of $16 million against operating profit of $7 million in the prior-year period.
Financial Position
As of Mar 31, 2020, Whirlpool had cash and cash equivalents of $2,837 million, long-term debt of $4,662 million and shareholders’ equity of $3,980 million. Management highlighted that the company has roughly $2 billion available in remaining committed credit facilities. The company generated negative free cash flow of $870 million.
3 Better-Ranked Stocks
Vista Outdoor (VSTO - Free Report) has reported a positive earnings surprise in the last two reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Netflix (NFLX - Free Report) has an expected long-term earnings growth rate of 30% and a Zacks Rank #2 (Buy).
H&R Block (HRB - Free Report) has a Zacks Rank #2 and an expected long-term earnings growth rate of 10%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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