Whirlpool Corp (NYSE:WHR)

CAPS Rating: 4 out of 5

Manufacturer and marketer of major home appliances. Principal products are home laundry appliances, home refrigerator and freezers, home cooking appliances, home dishwashers, room air-conditioner, and mixers and other small household appliances.

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Member Avatar afewgoodstocks14 (32.62) Submitted: 8/28/2014 3:18:04 PM : Outperform Start Price: $145.15 WHR Score: -1.35

Div. (Yield) $3.00 (2.0%)

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Member Avatar jtallenmd (99.60) Submitted: 5/7/2014 2:47:53 PM : Outperform Start Price: $149.05 WHR Score: -4.14

Estimated intrinsic value of $260.

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Member Avatar Dividends500 (74.96) Submitted: 3/21/2014 2:59:43 PM : Outperform Start Price: $134.63 WHR Score: +2.59

Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:

- A payout ratio below 50%
- An increasing dividend from the prior year

Because there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen.

Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).

http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13

If you have questions or see something you think is inaccurate feel free to let me know.

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Member Avatar DrGoldin (99.72) Submitted: 2/3/2014 5:39:04 PM : Outperform Start Price: $126.45 WHR Score: +6.63

The correction is making a few stocks look ridiculously cheap. Whirlpool is one of them.

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Member Avatar llturner103 (46.99) Submitted: 9/4/2013 2:05:48 PM : Outperform Start Price: $129.19 WHR Score: -2.28

Consumer appliance leader.

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Member Avatar Drwatson2100 (< 20) Submitted: 8/28/2013 7:25:08 AM : Outperform Start Price: $126.09 WHR Score: -1.23

There market is the US and Bazil. Expansion in China is the key

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Member Avatar recklessfier (< 20) Submitted: 4/26/2013 3:55:38 AM : Outperform Start Price: $114.07 WHR Score: +7.77

Screener_DBI

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Member Avatar red1582 (< 20) Submitted: 10/24/2012 2:22:59 PM : Outperform Start Price: $92.99 WHR Score: +23.31

Barchart

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Member Avatar phatchips767 (< 20) Submitted: 1/23/2012 5:13:20 PM : Outperform Start Price: $50.43 WHR Score: +150.80

Going up for Valuemoney-a player-

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Member Avatar NuclearSteve (70.25) Submitted: 12/30/2011 1:14:38 PM : Outperform Start Price: $44.95 WHR Score: +182.05

Housing is one of my 2012 themes. The XHB is bottoming and WHR also has a 4% dividend. Got idea from Bret Jensen on Seeking Alpha.

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Member Avatar passivecaller (86.24) Submitted: 12/17/2011 1:22:40 PM : Outperform Start Price: $44.11 WHR Score: +183.42

This is the number one appliance maker trading at 6 times earnings. It's trading below book value even though it has posted a solid profit throughout the financial crisis every year. This company is creating book value.

Simple Super Conservative Graham Number calculation has this one at ~$76 and a revival in the housing market will make this one an even high flyer

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Member Avatar knudfool (93.41) Submitted: 12/10/2011 12:46:25 AM : Outperform Start Price: $46.38 WHR Score: +170.19

Strong brand with good dividend and safe payout ratio.

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Member Avatar BeastlyInvestor (78.07) Submitted: 7/21/2011 11:57:35 AM : Outperform Start Price: $67.07 WHR Score: +79.13

Oversold? I sure think so

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Member Avatar xaneti (73.04) Submitted: 6/14/2011 7:39:45 PM : Outperform Start Price: $68.25 WHR Score: +68.32

Yahoo Screener, low P/E Low Forward P/E Low PEG 0.48

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Member Avatar edmcphee (< 20) Submitted: 5/16/2011 2:31:40 PM : Outperform Start Price: $78.59 WHR Score: +44.92

The company continues to bring inovation to their products.

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Member Avatar UnPortWatchList (< 20) Submitted: 4/26/2011 9:12:59 AM : Outperform Start Price: $80.39 WHR Score: +41.16

Whirlpool (NYSE: WHR)


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WHY BUY

Leading market position, global reach, and lower fixed cost structure.



Whirlpool is the #1 major appliance company in the world. It has a strong brand portfolio, leading scale (resulting in cost advantages), and the best global distribution. The sustainability of these advantages will depend on maintaining (and winning) additional market share and protecting the brands. Whirlpool is 60% larger than its nearest competitor (Electrolux) and has broader geographic reach. Recent restructurings have brought down the company's fixed costs, improved sourcing, and set the stage for operational leverage.



The way to play a housing recovery.



Whirlpool's sales have been sluggish due to retarded new-home construction and sour global economy. However, sales haven't declined as much as one would expect given the fall-off in the housing markets. Company sales were off as much as 12% from their 2007 peak, but are back to within 5% of that peak level. During the housing downturn, however, the company has taken considerable share in the new construction market, and Whirlpool appliances are now standard in every third new home built in the U.S. These share gains (from 25% to 36%)—coupled with any sort of recovery in new home construction—will provide meaningful (unexpected) upside for the shares.



Excellent emerging market exposure.



Nearly two-thirds of international sales are derived from emerging markets (about 33% of total sales). Whirlpool has great brands in Latin America and has established trade relationships in China to improve manufacturing and distribution in that geography. Furthermore, the company stands to expanded income in emerging markets, an aspiring middle class, and increased household penetration for homes that have never before had a refrigerator/washer/dryer/etc, but whose diets and incomes now allow for it.



Shareholder friendly management.



The operation is run by a seemingly conservative lot and they've got some sensible policies in place. Stock ownership guidelines exist for all executive VPs (4x base salary), Presidents (5x) and the CEO (7x). Additionally, 75% of annual compensation is at risk in the form of cash bonus and long-term incentives. Shorter-term and longer-term incentives are based on a vast scorecard that includes elements such as market share, innovation pipeline, employee engagement, revenue growth, operating profit margin, and free cash flow.



Long-term mindset.



When the economic recession hit Whirlpool naturally launched an all-out assault on its cost structure. One area it didn't cut, though, was innovation. A full 40% of its CapEx was tagged as "innovation related." In addition, it increased its R&D spending to 2.7% from 2.3%. Since 2005, the company has been issued nearly 500 patents.



THE BUSINESS

Whirlpool is the world's leading manufacturer and marketer of home appliances and has been in business for 100 years. It owns some of the best known appliance brands worldwide, including: Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, and Bauknecht. Six of its brands sell over $1 billion each. With sales of $18 billion in 2010, the company has 15% of the $120 billion global appliance market, with #1 market share in North America and Latin America, #2 share in India and #3 share in Europe.



The company sells laundry appliances, refrigerators, cooking appliances, dishwashers, and small household appliances worldwide. The small appliances are a newer line of products for the Whirlpool and an area of growth. It sells its products through key trade customers like Lowe's, Sears, Home Depot, Ikea, HH Gregg, and home builders. Its sales channels in foreign markets are more varied.



Whirlpool's sales are surprisingly resilient and have ranged from$17.1 billion to $19.4 billion over the past five years. While the company's brands are strong, competition is fierce and industry margins are low. The industry is characterized by constant innovation to sustain price points, meaning that innovation primarily benefits the consumer (it benefits the manufacturer only to the extent it can obtain patent protection and generate brand loyalty). Even so, under normalized conditions Whirlpool can convert 4-5% of sales to free cash flow and earn returns on capital in excess of its cost of capital.



STRATEGY

The Whirlpool strategy looks to leverage its existing brands:



Revenue growth.



First and foremost Whirlpool is a consumer products company and it intends to grow its sales through offering innovative products. More specifically, Whirlpool seeks to grow its revenue in three ways: geographic expansion, product line extensions, and in adjacent revenue streams. In all, the company expects 5-7% revenue growth per year over the next five years.



Extension "beyond the core".



Whirlpool is leveraging its brands to extend into new product lines. Small appliances (coffee makers, toasters, etc.), kitchen tools, water filtration, and more. Currently, such products only account for 22% of total sales.



Margin expansion.



Since 2006 Whirlpool has reduced its global manufacturing footprint from 45 locations to 35. Additionally, the company will continue to engage in best cost sourcing to leverage its size and bargaining power. Since 2006 Whirlpool has held gross margins steady in the face of significant cost increases and taken a full percentage point off of its SG&A expense line item. While Whirlpool hasn't eclipsed operating margins of 5.5% since 2004, it believes that 8% operating margins are attainable.



WHAT THE MARKET IS MISSING

I don't think the street believes Whirlpool can grow. And it hasn't, really, since 2006. But the company's focus over that time was cost reduction, not growth. With its cost reduction programs largely complete, it is now focusing its efforts toward growth. Whirlpool expects annual sales growth of 5-7% over the next five years, which should translate into 15% earnings growth.



RISKS

•Whirlpool carries $2.5 billion in debt with nearly $2 billion coming due by the end of 2015.



•In addition to its reported debt, the company has net pension and postretirement health care benefits of almost $2.3 billion. It expects to make pension contributions on the order of $200-$300 million over the next few years.



•In 2009 the company changed its method of depreciation for all long-lived production machinery and equipment to the modified units of production method. Prior to 2009 depreciation was done on a straight-line basis. In 2009, earnings were impacted to the tune of an extra $48 million.



VALUATION

I build up to revenue growth by explicitly modeling the sales by geographic region, making assumptions about unit growth, price/mix growth, and penetration growth. I assume Whirlpool only achieves a marginal amount of additional operating leverage given the dramatic cost reductions it has already realized. Over the ten year forecast period, my model makes the following assumptions:



•Net revenue rows from $18.4B (2010) to $24.3B (2020) – a 2.8% CAGR



•North America sales grow at a 10-year CAGR of 1.0%



•Europe sales grow at a 10-year CAGR of 0.3%



•Latin America sales grow at a 10-year CAGR of 7.9%



•Asia sales grow at a 10-year CAGR of 7.0%



•Gross margins improve from 14.0% to a peak of 15.5%



•Operating margins grow from 4.9% to a peak of 7.1%,
below the company's stated goal of 8.0%



•Free cash flow margins are in the range of 3.3%-4.8%
I use a 10.5% discount rate and a 2.5% terminal growth rate.



I find shares to have an intrinsic value of $95.



If we're able to nab shares at $75 we're essentially getting all future growth for free. Assuming slightly higher growth and additional operating leverage (both of which the company expects) shares could be worth $115.

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Member Avatar Bullish4ChiBears (58.38) Submitted: 2/21/2011 8:32:03 PM : Outperform Start Price: $75.38 WHR Score: +52.60

I'm still learning, but my thoughts... Good dividend (.43, currently over 2%) and current P/E under 11. Might still have a rough time for the next year or so until the recession lifts more and people begin buying bigger appliances, but with such a low P/E based on those tougher recession-time earnings for the longer term this seems like a good deal. Plus, for diversification and future growth they seem to have footholds in India and Brazil to sell appliances to the growing middle class.

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Member Avatar larchmont1 (< 20) Submitted: 1/13/2011 10:32:00 AM : Outperform Start Price: $80.41 WHR Score: +34.43

WHR trading at value multiples for EV/EBITDA (5.1x) and forward PE (9.9x). Earnings should beat estimates on strength of delayed durable good purchases during the 2008-10 severe downturn. Will also benefit from first time buyers in Asia and South America. If earnings outperformance materializes, multiples will expand. Expect 25% rise within 12 months.

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Member Avatar bassnmanjim (< 20) Submitted: 11/6/2010 10:30:09 PM : Outperform Start Price: $72.34 WHR Score: +48.05

Watching the graph and it looks like we may have a good upswing.

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Member Avatar ebitdat (< 20) Submitted: 9/16/2010 3:31:51 PM : Outperform Start Price: $65.85 WHR Score: +55.46

Unfairly beaten down by fears of a double-dip. Bread and butter of US economy will rebound strongly when fear subsides.

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