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Here's How Whirlpool (WHR) Looks Just Ahead of Q4 Earnings

Zacks Equity Research

Whirlpool Corporation WHR is slated to release fourth-quarter 2019 results on Jan 27, after the closing bell. Notably, the company delivered a positive earnings surprise of 0.25% in the last reported quarter. Moreover, its bottom line beat estimates by 4.6%, on average, over the trailing four quarters.

However, the Zacks Consensus Estimate for the company’s fourth-quarter earnings stands at $4.33, indicating an 8.8% decline from the year-ago quarter’s reported figure. Further, the consensus mark has been unchanged in the past 30 days. For fourth-quarter revenues, the consensus mark is pegged at $5.53 billion, suggesting a 2.3% decline from the prior-year quarter’s reported figure.

Whirlpool Corporation Price and EPS Surprise


Whirlpool Corporation Price and EPS Surprise

Whirlpool Corporation price-eps-surprise | Whirlpool Corporation Quote

Key Factors to Note

Whirlpool has been witnessing a soft sales trend, owing to declines across Latin America and EMEA segments. Softness in the Latin America segment has primarily been caused due to persistently weak industry demand in Mexico. Further, the segment has been witnessing soft operating margins on adverse currency and lower unit volume. In the last reported quarter, management revised industry demand expectations to 3-4% for Latin America, owing to weaker-than-expected demand environment in Mexico.

Further, higher spending toward the transition of Sanyo branded products to the Whirlpool brand in China has been hurting margins in the Asia segment. Management predicts these costs to hurt margins and profitability in the fourth quarter.

Whirlpool also witnesses pressures from cost inflation, and tariffs and logistic expenses as well as increased marketing and technology investments, and adverse currency. The persistence of such headwinds is likely to have offset benefits from improved price/mix in the fourth quarter. Moreover, higher spending on marketing and technology might have pressurized operating margin growth and weighed on profitability.

Nonetheless, the company is benefiting from cost-containment efforts and margin expansion in North America. Also, its robust product pipeline and solid innovation bode well for growth.

Whirlpool’s cost-based price increments and cost-reduction initiatives, focused on improving business efficiency, are reaping benefits. To counter raw material inflation and other cost headwinds, the company has been implementing global cost-based pricing for trade customers along with initiatives to cut fixed overhead expenses.

Despite challenging industry demand in Canada, Whirlpool’s North America division is witnessing momentum. The company expects the region’s results to be solid, driven by favorable price/mix and price increase along with improvement in the demand environment in the United States.

Zacks Model

Our proven model predicts an earnings beat for Whirlpool this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Whirlpool has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

DISH Network Corporation DISH currently has an Earnings ESP of +13.82% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BrightView Holdings, Inc. BV presently has an Earnings ESP of +2.70% and a Zacks Rank of 3.

The Walt Disney Company DIS currently has an Earnings ESP of +1.88% and a Zacks Rank #3.

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