Whirlpool Corporation (NYSE: WHR) has posted their earnings results for Q4 2019.
Revenue came in at $5.40 billion which slightly missed analysts’ estimates at $5.52 billion (-2.17% vs estimates)
EPS came in at $4.52 which beat analysts’ estimates at $4.27 (+5.85% vs estimates)
The company posted some strong guidance for 2020, in particular the company expects:
- GAAP earnings per diluted share of $14.80 to $15.80
- Ongoing earnings per diluted share(1) of $16.00 to $17.00
- Effective tax rate of 20-25%
- Cash provided by operating activities of $1.3 billion to $1.4 billion
- Free cash flow of $800 million to $900 million
Overall the stock has performed decently over the past year, rising almost 19% compared to this time last year. The company has also consistently grown their dividends over the past 9 years and currently sits at a yield of about 3.21%.
Whirlpool (WHR) is Valued Cheaper Compared to its Competitors
Looking at the forward P/E, Whirlpool ranks among the lowest compared to other home appliance manufacturers, however, it is worth noting that many of its competitors such as Philips and General Electric also manufacture a variety of other products outside of the home appliance category.
UK Whirlpool Machine Recalls Continue to Give the Company (and Britons) Headaches
Last December, Whirlpool announced that it was recalling about 519K washing machines that it sold in the UK due to concerns that they were overheating and presented a fire hazard. The recall represents about 20% of Whirlpool’s two most popular brands of washing machines, Hotpoint and Indesit.
These issues with the washing machines is reminiscent of a separate recall on Whirlpool’s tumble drying machines, which was revealed back in 2015 to be a potential fire hazard. The faulty drying machines were sold for over a decade in the UK, with the first sales dating back to 2004.
These recalls have certainly hurt Whirlpool’s reputation, especially in the UK where these problems originated. Whirlpool’s PR problem was further exacerbated when the customer support website went down back in December when the washing machine recall was announced.
Potential for Tech Companies to Become Competitors
If Whirlpool continues to suffer these dents in reputation, it could seriously hurt their business as the home appliance industry continues to become more and more competitive. There is even potential for tech companies to enter this space in a major way as demonstrated by Amazon’s push into home appliances with their AmazonBasics brand which already includes things such as toasters, microwaves, and small space heaters. If Amazon begins to manufacture washing and drying machines, most likely they would have a software advantage in home automation use cases over the current functionality of Whirlpool’s products.
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