On Tuesday, BofA Securities updated its stance on Whirlpool Corporation (NYSE:WHR), assigning an Underperform rating with a price target of $88.00 for the shares. The new rating reflects a shift from a previous position of No Rating, prompted by the dissipation of merger and acquisition speculation.
The change in outlook arose after Bosch stated its focus would be on integrating its recent acquisition of JCI's light commercial and residential HVAC assets over the forthcoming year, leading Whirlpool's stock to be evaluated based on its fundamentals.
Whirlpool recently posted adjusted earnings per share (EPS) for the second quarter of 2024 at $2.39, aligning with the consensus estimate. This result was impacted by challenges in North America which counterbalanced better performance in international markets.
Despite these headwinds, the company's management has revised its full-year 2024 adjusted EPS guidance downward to approximately $12, a decrease from the previous forecast of $13 to $15.
BofA Securities anticipates potential difficulties in achieving the updated guidance, suggesting that it assumes an improvement in the latter half of the year. The firm's analysts project that Whirlpool's 2024 EPS will fall 13% below the consensus estimate and also below the company's own guidance.
The price objective of $88 is based on a 7x enterprise value to estimated 2025 earnings before interest, taxes, depreciation, and amortization (EV/2025E EBITDA) multiple.
Whirlpool's recent performance and revised forecasts are now the primary factors influencing its stock's trajectory, as the company focuses on navigating through the current economic landscape without the influence of potential M&A activity. The price target and rating provided by BofA Securities reflect a cautious view of the company's ability to meet its financial targets in the upcoming periods.
In other recent news, Whirlpool Corporation has reported a robust second quarter with a 100 basis point sequential global margin expansion and strong top-line growth in its small domestic appliance (SDA) global business.
Despite pressures from the U.S. housing market, the company reiterated its flat net sales guidance of $16.9 billion for the year and adjusted its ongoing EBIT margin down to 6%. Whirlpool also plans to return $400 million to shareholders in dividends and expects a free cash flow of approximately $500 million for the year.
JPMorgan has revised its outlook on Whirlpool, raising the price target to $103.00 from the previous $98.00, while maintaining a Neutral rating on the stock. This adjustment follows Whirlpool's second-quarter conference call, where the company revised its 2024 margin and Operating EPS guidance.
Whirlpool now anticipates a margin of approximately 6.0% and an Operating EPS of $12.00, marking a decrease of 80 basis points and 14% respectively, due to continued soft discretionary demand in North America.
Despite revising its ongoing EBIT margin guidance downward due to continued discretionary demand pressure in the U.S. housing market, Whirlpool's international businesses in Asia and Latin America are generating positive cash flow. The company also expects margin expansion to about 9% by year-end. These are the recent developments in the company's performance and outlook.
InvestingPro Insights
As Whirlpool Corporation (NYSE:WHR) faces a reassessment of its financial outlook by BofA Securities, real-time data from InvestingPro offers additional context for investors. The company's market capitalization stands at $5.45 billion, with a P/E ratio of 10.02, reflecting a valuation that might be considered reasonable in the context of its industry. However, looking at the adjusted P/E ratio for the last twelve months as of Q2 2024, which is at 7.55, it becomes evident that investors are valuing future earnings more favorably.
InvestingPro Tips highlight some critical aspects of Whirlpool's financial health and future expectations. Despite analysts revising their earnings downwards for the upcoming period, Whirlpool has maintained dividend payments for an impressive 54 consecutive years, offering a significant dividend yield of 7.04% as of the end of 2024. This may appeal to income-focused investors, especially in a challenging market environment. Additionally, while analysts predict a sales decline in the current year, Whirlpool has been profitable over the last twelve months, which might provide some reassurance about the company's ability to navigate through economic headwinds.
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