Whirlpool Jumps 5% As Demand Recovery Fuels 3Q Sales Beat


Shares of Whirlpool Corp. soared 4.7% in Wednesday’s extended trading session after the home appliance maker reported better-than-expected 3Q results. The company’s 3Q revenues of $5.29 billion surpassed analysts’ expectations of $4.61 billion. Quarterly revenues grew 3.9% year-on-year mainly driven by a recovery in demand across multiple regions, partially offset by COVID-19 pandemic-related supply constraints.

Its revenues in North America slipped 1.6% to $3 billion as COVID-related supply constraints remained a drag. However, the regions order backlog remains high. Whirlpool (WHR) sells refrigerators, washing machines, dishwashers, ACs, among others

The appliance maker’s 3Q adjusted EPS soared to $6.91 from $3.97 a year ago and exceeded the Street estimates of $3.75. The company’s CEO Marc Bitzer said, “From the outset of this global crisis, we have taken decisive actions to weather the uncertainty and win in the eventual economic recovery.”

Buoyed by stronger-than-expected quarterly performance, Whirlpool reinstated its full-year 2020 outlook. The company expects revenues to decline between 5% and 7%, reflecting a sales guidance range of $18.99-$19.40 billion versus the Street consensus of $18.22 billion. Adjusted EPS are forecast at $17.50-$18 versus $13.24 expected by analysts per share. (See WHR stock analysis on TipRanks).

Ahead of the earnings, RBC Capital analyst Michael Dahl raised the stock’s price target to $162 (17.7% downside potential) from $122. However, Dahl reiterated a Sell rating citing the stock’s “peak” valuation which could skew the risk-reward to the downside. The analyst also pointed to the company’s longer-term earnings risk due to market share loss and margin contraction.

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 3 Holds, 3 Buys and 2 Sells. Given the year-to-date share price increase of 33.4%, the average price target of $166.83 implies downside potential of about 15.2% to current levels.

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