Whirlpool Stock Gains on Strong EPS Beat, Analysts Remain Cautious

© Reuters. Whirlpool (WHR) Stock Gains on Strong EPS Beat, Analysts Remain Cautious

Whirlpool (NYSE:WHR) trimmed its ongoing FY EPS outlook due to rising inflation levels and the timing of prior price hikes.

Whirpool reported Q1 ongoing EPS of $5.31, down from $7.20 in the year-ago period and above the consensus estimates of $4.79. Net sales totaled $4.92 billion in the quarter, down 8.2% YoY and missing the analyst consensus of $5.3 billion.

North America net sales came in at $2.79 billion, down 8.3% YoY and also below the analyst consensus of $3.14 billion.

Going forward, Whirlpool expects ongoing EPS for the full year to be in the range of $24 to $26, down from the previous guidance of $27 to $29 and compared to the analyst expectations of $25.99 per share. Net sales are expected to grow 2% to 3% for the full year.

The company estimates FY operating cash flow to range between $1.25 billion and $1.5 billion, unchanged from its previous forecast and compared to the consensus projection of $1.3 billion.

“The fundamental strength of consumer demand trends remain intact and the disciplined execution of our go-to market actions position us to deliver another strong year of performance in 2022”

WHR raised its buyback authorization by $2 billion. The company also announced the initiation of a strategic review of its EMEA business.

BofA analyst Elizabeth Suzuki reiterated a Neutral rating as she views medium-term upside and downside risks as balanced. Suzuki is focused on the US market, which is the “key profit center for WHR.”

“The company remains optimistic about the demand backdrop for 2022. We are more cautious on the three key factors of appliance demand: 1) Appliance replacement (about half of demand)—which was accelerated in 2020-2021 due to increased appliance usage during the pandemic, and leaving less pent-up demand; 2) new housing (about 10-15% of demand)—which we expect to be somewhat pressured by rising mortgage rates and affordability concerns; 3) discretionary renovation demand,” she said in a client note.

Raymond James analyst Sam Darkatsh focused on the “EMEA-xit.”

“Most importantly, Whirlpool announced the initiation of a strategic review of its EMEA business (to be completed by 3Q22), presumably including a potential outright sale of the entire business. Recall we wrote a differentiated “think piece” about the possible benefits of selling the European business in 2019. We believe all-in EBITDA is somewhere between $150-200M annually, but also we peg tangible net EMEA assets somewhere around $5-6 BILLION. We find the Board’s recent $2B increase of the share repurchase authorization as a possible indicator of reasonable net proceeds, should a sale be consummated,” Darkatsh wrote.

Whirlpool stock price is up 3.5% today.

By Senad Karaahmetovic