Yahoo Finance Why Is Whirlpool (WHR) Down 9% Since Last Earnings Report?
A month has gone by since the last earnings report for Whirlpool (WHR). Shares have lost about 9% 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 Q1 Earnings Top Estimates, Sales Decline Y/Y
Whirlpool posted first-quarter 2024 results, wherein sales and earnings beat the Zacks Consensus Estimate. However, the company’s top and bottom lines declined year over year. Results benefited from market share growth, industry recovery and gains from cost takeout actions offset by an unfavorable price/mix.
Q1 Details
The appliance maker reported first-quarter adjusted earnings of $1.78 per share, surpassing the Zacks Consensus Estimate of earnings of $1.61 but down 33.1% year over year.
Net sales of $4,490 million beat the Zacks Consensus Estimate of $4,405 million but declined 3.4% year over year. Excluding the unfavorable impacts of foreign exchange, net sales were $4,446 million, down 4.4% year over year.
Quarterly gross profit was $642 million, down 15.9% from $763 million reported in the year-ago quarter. The gross margin declined 210 basis points (bps) year over year to 14.3%.
The ongoing EBIT of $195 million declined 22.3% from $251 million in the year-ago quarter. The ongoing EBIT margin of 4.3% contracted 110 bps year over year due to cost takeout endeavors.
Regional Performances
Net sales for the MDA North America segment declined 8.1% year over year to $2,428 million due to adverse price/mix and 2% decline in industry. Excluding currency also, net sales decreased 8.1% year over year. The segment’s EBIT decreased 49.2% year over year to $135 million while the EBIT margin contracted 450 bps to 5.6%, owing to promotional environment partly negated by cost take out actions.
Net sales for the MDA Europe segment were down 5% year over year to $804 million. Excluding currency, sales declined 6.9% year over year on persistent softness in demand trends in Europe. The segment’s EBIT loss of $9 million widened from the operating loss of $5 million reported in the year-ago quarter. This was caused by unfavorable price/mix.
Net sales from MDA Latin America rose 12% year over year to $837 million. Excluding currency, the segment’s sales rose 8.4% year over year, driven by robust share gains in the region, which more than offset the adverse price/mix. The segment’s EBIT of $65 million advanced 80.6% year over year. The EBIT margin expanded 300 bps year over year to 7.8% on the back of increased volumes and cost-cutting measures.
Net sales in MDA Asia fell 2.4% year over year to $239 million. Excluding the currency impacts, sales were down 1.7% as unfavorable price/mix significantly offset higher volumes from share gains. The segment’s EBIT of $11 million reflected a 37.5% increase from $8 million reported in the year-ago quarter. Segmental EBIT margin of 4.6% expanded 130 bps from 3.3% in the prior-year quarter, benefiting from cost takeout actions partly negated by adverse price/mix.
Net sales in SDA Global increased 7.1% year over year to $182 million. Excluding the currency impacts, sales improved 6.5%, driven by growth across key countries and direct to consumer business offset by unfavorable price/mix. The segment’s EBIT of $33 million reflected a 73.7% increase from $19 million reported in the year-ago quarter. Segmental EBIT margin of 18.1% expanded 690 bps from 11.2% in the prior-year quarter, benefiting from cost actions and volume growth.
Other Financial Details
During first-quarter 2024, Whirlpool used cash of $873 million from operating activities. It reported a negative free cash of $988 million. WHR incurred capital expenditure of $115 million in the same period.
The company returned $95 million in cash to shareholders as dividends in first quarter 2024.
Outlook
Whirlpool issued guidance for 2024. It forecasts net sales of $16.9 billion, suggesting a 13.1% decline from the year-ago actual. The company anticipates ongoing EBIT margin of 6.8%, indicating an increase from 6.1% reported in 2023.
On a GAAP and ongoing basis, Whirlpool expects earnings per share in the range of $5.00-$7.00 and $13.00-$15.00, respectively. The adjusted earnings guidance includes $300-$400 million of cost actions. In 2023, WHR reported earnings per share of $8.72 and $16.16, respectively, on a GAAP and ongoing basis. Management anticipates GAAP and adjusted tax rate of 25% and 0%, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -24.37% due to these changes.
VGM Scores
At this time, Whirlpool has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 these revisions 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 Corporation (WHR) : Free Stock Analysis Report
