Simple Concepts Research Group

Is Whirlpool (NYSE: WHR) Being Undervalued By Investors?

by | Apr 5, 2022 | 52 Week Lows, Stock Picks

whirlpool whr stock valuation

Whirlpool (WHR) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Whirlpool (WHR) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Whirlpool Fundamentals

WHR Stock Rating

Stock Price Target: $225.33

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Whirlpool in comparison to the Home Furnishing industry and the S&P 500.

Whirlpool is a Large Cap company with a Market Cap of $10.2B.

How are investors using Whirlpool earnings yield to assess the company?

Whirlpool (WHR)_ Earnings Yield in Comparison to the Home Furnishing Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Whirlpool is 16.58%, in comparison to 3.83% for the S&P 500 and 2.42% for the 10-year treasury bond. The median earnings yield for the Home Furnishing industry is 12.38%.

What does Whirlpool Price-to-Earnings Ratio (P/E) tell investors about the company?

Whirlpool (WHR)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Home Furnishing Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Whirlpool is currently trading at a P/E of 6.07. The P/E for the Home Furnishing industry is 9.48 and the P/E for the S&P 500 is 26.13.

What is the current Price-to-Sales Ratio (P/S) for Whirlpool?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Whirlpool is currently trading at a P/S of 0.49. The P/S for the Home Furnishing industry is 1.05 and the P/S for the S&P 500 is 3.03.

How does Whirlpool Price-to-BookRatio (P/B) compare to the Home Furnishing industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Whirlpool P/B ratio is 2.09. The P/B for the Home Furnishing industry is 2.86 and the P/B for the S&P 500 is 4.66.

How attractive is Whirlpool Return on Invested Capital (ROIC) to investors?

Whirlpool (WHR)_ Return on Invested Capital in Comparison to the Home Furnishing Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Whirlpool ROIC is currently 17.60% in comparison to 13.17% for the Home Furnishing industry and 9.10% for the S&P 500.

Whirlpool (WHR)_ Price Target & 52-Week Price Range

How has WHR stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Whirlpool has traded between the range of $169.25 and $257.68.

The current Analyst Price Target for Whirlpool is $225.33.

What is Whirlpool YOY Performance in comparison to its industry and the total market?

The YOY performance for Whirlpool is -25.29%. The Home Furnishing industry has a YOY performance of -18.29% in comparison to the YOY S&P 500 performance of 14%.

Whirlpool (WHR)_ YOY Performance in Comparison to the Home Furnishing Industry and the S&P 500

Recent Financial Results

  • Full-year net sales growth of 13%, driven by strong consumer demand and cost-based pricing actions
  • Significant cash generation for full-year 2021; cash provided by operating activities of $2.2B and adjusted free cash flow of $2B, driven by strong earnings and working capital improvements
  • Delivered Q4 GAAP and ongoing (non-GAAP) earnings per diluted share(1) of $4.90 and $6.14, respectively, driven by cost-based pricing actions, largely offsetting over $500M of inflation, led by raw material cost increases
  • Repurchased $400M of shares in the Q4 2021

Stock Price Target: $225.33

Company Overview

WHR Stock Rating

Whirlpool Corporation manufactures and markets home appliances and related products. It operates through four segments: North America; Europe, Middle East and Africa; Latin America; and Asia. The company’s principal products include refrigerators, freezers, ice makers, and refrigerator water filters; laundry appliances and related laundry accessories; cooking and other small domestic appliances; and dishwasher appliances and related accessories, as well as mixers. It markets and distributes its products primarily under the Whirlpool, Maytag, KitchenAid, JennAir, Amana, Roper, Affresh, Gladiator, Swash, everydrop, Speed Queen, Hotpoint, Bauknecht, Indesit, Ignis, Privileg, Consul, Eslabon de Lujo, Brastemp, Acros, Ariston, Diqua, and Royalstar brands.

The company sells its products to retailers, distributors, dealers, builders, and other manufacturers, as well as directly to consumers. Whirlpool Corporation was founded in 1911 and is headquartered in Benton Harbor, Michigan. The current CEO is Marc Bitzer.

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This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.