Whirlpool Corporation (WHR) presents an interesting investment opportunity from a valuation perspective. The company's EBITDA stands at a robust
$1.46 billion, indicating a strong earning capacity. Moreover, the company's Price to Book ratio is 3.08X, which is relatively low compared to industry peers, suggesting that the stock may be undervalued. This, combined with a Forward PE of 8.06, further underscores the potential for an upsurge in the stock's value. However, investors should also consider the company's high current liabilities of
$7.74 billion, which could pose a risk to future profitability. Despite this, the overall valuation metrics suggest that Whirlpool's stock could offer significant upside potential come February 2024.
Important Highlights
Whirlpool carries a debt of 8.2 billion, with a debt to equity (D/E) ratio of 1.3. This is considered acceptable within its current industry classification. The company has a current ratio of 1.14, which suggests it may struggle to meet its financial obligations when they are due. While debt can support Whirlpool's operations, issues may arise if the company struggles to pay it off, either through new capital or free cash flow. In such a scenario, Whirlpool's shareholders could potentially lose their investment if the company fails to meet its legal debt repayment obligations. However, it is more common for companies like Whirlpool to issue additional shares at discounted prices, thereby diluting the value of existing shares. In this context, debt can be an excellent tool for Whirlpool to invest in growth at high rates of return. When considering Whirlpool's use of debt, it should always be evaluated in conjunction with cash and equity. Macroaxis provides trading recommendations on Whirlpool to complement and cross-verify current analyst consensus on the company. Our trade advice engine determines the company's growth potential exclusively from the perspective of an investor's current risk tolerance and investment horizon.
We determine the current worth of Whirlpool using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Whirlpool based exclusively on its
fundamental and basic
technical indicators. By analyzing Whirlpool's
financials, quarterly and monthly indicators, and related drivers such as
dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of
Whirlpool's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Whirlpool. We calculate exposure to Whirlpool's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Whirlpool's related companies.
Whirlpool Investment Alerts
Whirlpool investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Whirlpool performance across your portfolios.Please check all
investment alerts for Whirlpool
Whirlpool Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare Whirlpool value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Whirlpool competition to find
correlations between indicators driving the intrinsic value of Whirlpool.
Whirlpool Gross Profit
Whirlpool Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Whirlpool previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Whirlpool Gross Profit growth over the last 10 years. Please check Whirlpool's
gross profit and other
fundamental indicators for more details.
What is the case for Whirlpool Investors
The firm reported the last year's revenue of 19.29
B. Reported Net Loss for the year was (1.61
B) with profit before taxes, overhead, and interest of 3.07
B.
| 2021 | 2022 | 2023 | 2024 (projected) |
Interest Expense | 175M | 190M | 218.5M | 217.1M | Gross Profit | 4.4B | 3.1B | 3.5B | 3.9B |
Margins Breakdown
Whirlpool profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Whirlpool itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Whirlpool profit margins.
| Operating Margin | 4.37 |
| EBITDA Margin | (0.0277) |
| Gross Margin | 0.2 |
| Profit Margin | (0.0711) |
Whirlpool Net Income Per Employee is relatively stable at the moment. Also, Whirlpool Earnings Before Interest Taxes and Depreciation Amortization USD is relatively stable at the moment. Every cloud has a silver lining, and this could be the case for Whirlpool (WHR) come February 2024.
Despite a challenging financial landscape marked by a net income loss of 1.6 billion and a probability of bankruptcy at 32.69%, there are indicators that suggest a potential upsurge in the company's stock value. The company's current ratio stands at 1.16X, indicating a relatively healthy short-term liquidity position. Furthermore, the company's forward dividend yield of 0.0604 and a payout ratio of 43.18% demonstrate a commitment to returning value to shareholders. The price to earnings ratio of 6.81X, lower than the industry average, suggests that the stock is undervalued, providing an opportunity for investors. However, the high beta of 1.54 signals a higher volatility compared to the market, which investors should factor into their decision-making. In conclusion, while Whirlpool's
financial health has been shaky, there are signs of potential recovery and growth in the near future. .
Will Whirlpool pull back in February 2024?
The latest Treynor Ratio for Whirlpool Corporation has increased to -0.04, indicating a potential decrease in the stock price. This negative ratio suggests that the
systematic risk of the stock is not being sufficiently offset by its potential returns. Consequently, investors should prepare for a possible pullback in February 2024. Despite Whirlpool's proven resilience in the past, current market indicators recommend a cautious approach in the near term. As of January 28th, Whirlpool reports a Standard Deviation of 2.93, a mean deviation of 1.81, and a Market Risk Adjusted Performance of -0.03. In relation to fundamental indicators, the
technical analysis model allows for an examination of existing technical drivers of Whirlpool, as well as their interrelationships. Specifically, this information can be used to determine if the company will mirror its model of historical data patterns, or if prices will eventually revert. We have analyzed and collected data for thirteen technical drivers for Whirlpool, which can be compared to its
competitors. We encourage you to review Whirlpool's variance and skewness to determine if the stock is priced fairly, taking into account its latest price of $115.96 per share. Given that Whirlpool has an information ratio of -0.11, we strongly recommend that you verify Whirlpool's current market performance to ensure the company's future sustainability.
Our Bottom Line On Whirlpool
While some other entities within the furnishings, fixtures & appliances industry are still a little expensive, even after the recent corrections, Whirlpool may offer a potential longer-term growth to retail investors. With a somewhat neutral outlook on your 90 days horizon, it may be better to hold off any trading activity and neither buy new shares of Whirlpool nor exit your existing holdings in the Stock. It seems the expected volatility has not yet been fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Whirlpool.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Whirlpool. Please refer to our
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