) reached a new 52-week high of $156.69 yesterday, and eventually
closed trade at $156.15. The average volume of shares traded over
the last 3 months was over 1,060K. Notably, this home appliances
manufacturing company amassed a year-to-date return of 48.4%.
Moreover, Whirlpool currently trades at a forward P/E of
15.5x, a 3.6% discount to the peer group average of 16.08x. The
last traded price is 4.4% below the Zacks Consensus average
analyst price target of $163.40, providing sufficient scope for
further improvement in the company's stock price. Additionally,
the company's long-term estimated earnings per share (EPS) growth
rate is 29.7%, substantially higher than the peer group average
of 19.8%. At present, Whirlpool has a Zacks Rank #2 (Buy).
We believe that the company's strong price appreciation was
mainly driven by
) recent announcement of a positive outlook for the U.S. consumer
durable industry. Moody's declared that consumer durable
companies would witness a 5%-6% rise in operating profit in the
next 12-18 months owing to recovery in the U.S. economy, signs of
stability in the housing market and increased spending by
consumers. Apart from Whirlpool, other companies which will
likely benefit from these improved trends include
Leggett & Platt Incorporated
Apart from Moody's recent forecast, we believe that an
impressive record of beating the quarterly earnings expectations,
a positive fiscal 2013 outlook and a decent dividend yield
enabled Whirlpool's stock price to reach the new high.
With regard to earnings surprise, Whirlpool has beaten the
Zacks Consensus Estimate thrice in the trailing 4 quarters and
outperformed it by 3.0% in third-quarter 2013. The average
positive surprise in the trailing 4 quarters is 1.5%.
Notably, Whirlpool reported outstanding bottom-line results
for the third quarter of 2013. Adjusted quarterly earnings of
$2.72 per share were significantly higher than the year-ago
quarter figure of $1.80 and surpassed the Zacks Consensus
Estimate of $2.64. The robust bottom-line performance was
primarily driven by the company's sustained focus on cost and
capacity reduction initiatives, along with better price and
Buoyed by better-than-expected quarterly results, Whirlpool
raised its earnings guidance for 2013. For full-year 2013,
Whirlpool now expects earnings per share in the range of
$10.45-$10.65, up from the prior projection of $10.05-$10.30.
Currently, the Zacks Consensus Estimate stands at $10.06 per
share, which is much lower than the company's guidance range.
Apart from strong third-quarter results, Whirlpool's growth
story looks compelling due to its sustained focus on new product
development, implementation of cost containment initiatives and
global expansion of business to eliminate concentration risks
that bode well for future growth.
Whirlpool is also known for its shareholder-friendly moves.
Since 1983, the company has increased its quarterly dividend from
22.5 cents to 62.5 cents. Currently, it yields a solid 1.6%, with
a payout ratio of 23%. We believe that its continuous dividend
payments and increments reflect the growth potential of its
earnings and cash flow generation capabilities.
Over the last 101 years, Whirlpool has emerged as the leading
manufacturer and supplier of major home appliances. It is
considered to be the largest home-appliances manufacturer in the
world, ahead of Electrolux AB, LG, Samsung, General Electric Co.
and Haier Electronics Group Company Ltd. Moreover, the company is
placed among the major home appliance makers in India and
JARDEN CORP (JAH): Free Stock Analysis Report
LEGGETT & PLATT (LEG): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
WHIRLPOOL CORP (WHR): Free Stock Analysis
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