We are upgrading our long-term recommendation on
) to Outperform from Neutral based on its effective cost-control
measures, product innovation strategies and solid quarterly
Whirlpool's operations are spread worldwide. The company derived
51% of its revenues from North America, 27% from Latin America, 17%
from Europe, the Middle East and Africa and 5% from Asia last year.
The geographic diversification has enabled Whirlpool to keep its
top line more or less stable in difficult economic times as it cuts
out some of the risks arising from concentration in one
In addition, Whirlpool is focused on improving its margins. It
has implemented a number of cost-control measures along with
cost-based price increments. This particular strategy will probably
help it withstand the uncertain economic environment.
Moreover, Whirlpool is a company which stresses product
innovation. Its investment in research and development (R&D)
has been consistent over time as shown by the R&D spending of
$500 million in 2009, $532 million in 2010 and $578 million in
2011. Whirlpool's R&D efforts are bearing positive consequences
as the new products are gaining acceptability among consumers and
driving the company's positive price-product mix.
Whirlpool had posted solid results in its recently reported
first quarter. The company's adjusted net income jumped to $1.41
per share in the quarter from 64 cents in the same period last
year, surpassing the Zacks Consensus Estimate of $1.12 by a healthy
However, revenues in the quarter dipped slightly to $4.35
billion from $4.40 billion last year as improving product price/mix
was offset by unfavorable currency, lower industry demand and lower
monetization of tax credits. As a result, revenues failed to meet
the Zacks Consensus Estimate of $4.37 billion.
Going forward, the company expects to earn $6.50 to $7.00 per
share on an adjusted basis in 2012, ahead of the Zacks Consensus
Estimate of $6.42 for the year.
Whirlpool is the largest manufacturer of home-appliances in the
world, ahead of the likes of
), LG, Samsung and
General Electric Co.
). It is a market leader across the globe, ranking first in North
America and Latin America, second in India and third in Europe.
Whirlpool's cost and capacity reduction initiatives are
noteworthy, resulting in improved margins. However, we are
concerned about the ongoing weakness in Europe, where the company
expects sales to decline this year.
Whirlpool currently has a Zacks #1 Rank, reflecting a short-term
(1 to 3 months) Strong Buy rating, which is in line with our
long-term (more than 6 months) recommendation.
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WHIRLPOOL CORP (WHR): Free Stock Analysis
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