Whirlpool Gains As Earnings Top Estimates

Whirlpool Corporation (WHR) shares edged 2.18% higher Wednesday after the home appliance maker delivered better-than-expected quarterly results.

The company posted second-quarter adjusted earnings of $2.15 a share, easily surpassing analysts’ forecast of 96 cents a share. Meanwhile, revenues of $4 billion topped the Street expectation by 11%. Both figures declined from the year-ago quarter due to disruptions caused by the pandemic.

The company’s North American business saw EBIT margins grow 20 basis points to 12.6%, while all geographic regions experienced a significant recovery in June. CEO Marc Bitzer said he pleased with the results. “While we recognize the uncertainty and volatility which lies ahead of us, we are proud of the way in which we managed through the most difficult quarter of this global crisis,” he said.

Through July 22, Whirlpool stock has a market capitalization of $9.13 billion, offers a healthy 3.34% dividend yield and trades flat on the year. However, over the past three months, the shares have surged almost 50%.

Managing the Pandemic

Management’s COVID-19 response plan remains on track, generating cost savings of roughly $100 million and freeing up $124 million in free cash flow in the second quarter. The company also boasts a strong liquidity position, with $5 billion in cash and available credit as of June 30.

“In the quarter, we delivered solid cost takeout globally and strong cash flow improvement through disciplined working capital management,” CFO Jim Peters, said, per Barron’s. “The actions we took earlier this year to sustain our margins and protect our liquidity strengthened our ability to succeed through the ongoing COVID-19 pandemic and have prepared us to withstand current economic uncertainty.”

Wall Street View

Analysts sit mostly on the fence, hesitant to make a call until more retail sales data becomes available in the upcoming quarters. The stock receives 4 ‘Hold’ ratings, 3 ‘Buy’ ratings, and 1 ‘Sell’ rating. The Street has a consensus 12-month price target on the shares at $132.86, representing 12.6% downside from Wednesday’s $152.10 close.

Technical Outlook

Whirlpool shares have staged a remarkable v-shaped recovery over the past four months to trade just 6% below their 2020 high. The company’s upbeat earnings yesterday helped price breakout from a tight pennant sitting above an ascending triangle in a move that could see a test of the multiyear high around $160. Traders should also watch for a golden cross buy signal – when the 50-day simple moving average (SMA) crosses above the 200-day SMA. This often marks the start of a new uptrend. On the other hand, a reversal at current levels could trigger a decline to crucial horizontal support at $122.