Is Whirlpool (WHR) Likely to Surpass Earnings Estimates in Q3?

Whirlpool Corporation WHR is slated to release third-quarter 2020 results on Oct 21, after the closing bell. Notably, the company delivered an earnings surprise of 190.5% in the last reported quarter. Moreover, the bottom line beat estimates by 53.3%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s third-quarter earnings stands at $3.52, indicating an 11.3% decline from the year-ago quarter’s reported figure. However, the consensus mark has increased 0.6% in the past 30 days. For third-quarter revenues, the consensus mark is pegged at $4.55 billion, suggesting a 10.7% decline from the prior-year quarter’s reported figure.

Key Points to Note

Despite the impacts of the coronavirus outbreak, the recent spike in demand for the home and kitchen products, including cleaning equipment, kitchen essentials and air purifiers, has been aiding the top and bottom lines of Whirlpool. The company’s top line for the third quarter is likely to include gains from strong market demand for its HEPA Air Purifier, which is capable of removing as much as 99.97% of particles from the air. Moreover, in the last reported quarter’s earnings call, management highlighted that the company witnessed a solid recovery in demand across all regions since June.

Whirlpool Corporation Price and EPS Surprise


Whirlpool Corporation Price and EPS Surprise

Whirlpool Corporation price-eps-surprise | Whirlpool Corporation Quote

Also, it has been focusing on enhancing e-commerce portals and improving direct-to-consumer capabilities as most consumers have shifted to online shopping habits due to the coronavirus outbreak-induced lockdown. Thus, strong online sales are likely to have contributed meaningfully to the third-quarter performance.

Moreover, the company has been gaining from cost-containment efforts, which provided a cushion to the otherwise soft results in the third quarter due to the pandemic. It has been on track with its cost-based price increments and cost-reduction initiatives, gains from which should get reflected in the third-quarter margins. Moreover, it targeted more than $500 million of net cost takeout from actions such as curtailing structural and discretionary costs, capturing raw material deflation opportunity, effectively managing working capital, and syncing supply chain and labor levels with demand. These endeavors are likely to have provided some cushion to the bottom line in the third quarter.

What the Zacks Model Says

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 #2 and an Earnings ESP of +9.25%.

Other Stocks With Favorable Combinations

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

MarineMax, Inc. HZO currently has an Earnings ESP of +51.96% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corporation DECK currently has an Earnings ESP of +0.95% and a Zacks Rank #2.

Ralph Lauren Corporation RL presently has an Earnings ESP of +6.22% and a Zacks Rank #2.

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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.

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