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Can Whirlpool's Strategies Save it From Forex Troubles?

Whirlpool Corp.WHR , the world's largest home-appliances manufacturer, has managed to keep its fundamentals intact through the strategy of undertaking innovations that helps to tap additional sales and gain market share. Also, Whirlpool's solid integration and cost-productivity activities are expected to enhance its performance.

Whirlpool is among the few companies which heavily invest in technologies to produce differentiated products that suit the needs of their end consumers. Additionally, the company is keen on boosting revenues of its core appliance business through expansions and investments. This in turn, will fuel growth of the company's high-margin categories.

Though Whirlpool appears to be mostly dependent on the North American region for its revenues, the company has been enhancing its presence in other parts of the world in order to boost global market share. Taking a step toward this direction, Whirlpool recently acquired American Dryer Corporation, Italy-based Indesit Company S.p.A. and China's Hefei Rongshida Sanyo Electric Co. Ltd. Also, in an attempt to achieve growth via expansion, the company is striving to undertake innovations in fields that are different from its key appliance business. These diversifications will help the company to eliminate risks that can arise from concentration in one area.

Further, we believe Whirlpool is a promising option for investors seeking both growth and income given its shareholder-friendly moves. Since 1983, the company has increased its dividend from 22.5 cents to 90 cents. In the first half of 2015, the company shelled out $130 million in cash dividends and $50 million toward share buyback. We believe that its continuous dividend payments and increments along with regular share buybacks reflect the growth potential of its earnings and cash flow generation capabilities.

However, we remain slightly concerned due to the company's performance in the recently reported quarter. Despite posting an earnings beat in the second quarter, Whirlpool's sales lagged estimates as soft Brazilian demand outweighed the sales gains in other geographic regions, mainly Europe and Asia. Also, the company's results are being persistently impacted by currency headwinds.

Further, we see little chances of recovery on these fronts in the short run as the currency headwinds are expected to persist through 2015 and the company projects shipments in Latin America to fall nearly 15% in 2015. This has resulted in a continued fall in the Zacks Consensus Estimate over the last 60 days.

Given the pros and cons discussed above, Whirlpool currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader consumer discretionary sector include Virco Mfg. Corporation VIRC , Hooker Furniture Corp. HOFT and Guess' Inc. GES , all carrying a Zacks Rank #1 (Strong Buy).

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WHIRLPOOL CORP (WHR): Free Stock Analysis Report

GUESS INC (GES): Free Stock Analysis Report

HOOKER FURNITUR (HOFT): Free Stock Analysis Report

VIRCO MFG (VIRC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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