Whirlpool: Buy This High-Yielding Value Before It Spins Higher

Key Points

• Whirlpool's 20% stock price plunge is an opportune time to get into this high-yielding deep value. 
• Critical details include the rapidly improving earnings quality, cash flow, and balance sheet. 
• Analysts' trends are positive and suggest a double-digit rebound and fresh long-term highs by year's end. 

Whirlpool’s NYSE: WHR FQ4 2024 results and guidance for 2025 were lackluster, but they did not provide any real reason for the stock price to sell off the way it did. Tepid relative to analysts and market hopes does not mean bad; these results weren’t. The takeaway is that Whirlpool’s turnaround is progressing and is on track to revert to top-line growth in F2026. Highlights from 2024 and the 2025 guidance include improving margin, cash flow, and balance sheet health, which provide a solid foundation upon which the company can build shareholder value. 

Whirlpool Is Repositioning for the U.S. Housing Recovery

Its European divestiture deeply impacted Whirlpool’s Q4 results, but they reveal the positive impact of its repositioning efforts. While revenue of $4.13 billion is down nearly 20% year-over-year (YoY) and missed consensus by 250 basis points, organic growth is present in ongoing businesses, and margins were improved. Segmentally, strength in the Latin American, Asian, and Global segments offset weakness in the United States. United States sales were impacted by end-market inventory reduction, which sets the manufacturing company up for sales improvement later this year and in 2026. 

The margin news is impressive. The company’s restructuring and cost-savings reduced expenses by another $300 million in F2024, resulting in a wider adjusted EBIT margin. The adjusted margin expanded by 80 basis points to 6% and is expected to widen further in F2025. The company is forecasting another $200 million plus in cost take-out and plans to use the increase in FCF to pay down debt. The bottom line in Q4 is that adjusted earnings of $4.57 grew nearly 20% despite the top-line contraction and outpaced consensus by a vast 500 basis points margin. 

The guidance is weak, with adjusted earnings forecast at $10 compared to the $10.30 consensus reported by MarketBeat. However, the projections for cost savings, margin improvement, and debt reduction offset it, and there is a chance guidance is cautious. Interest rates are not expected to fall much more in 2025, but the housing market is set to grow due to demand, and there are labor market and administrative tailwinds to drive it. Labor markets remain resilient, with jobs growing healthy and wages rising by mid-single-digits YoY, and Trump policies are expected to bolster the trend. 

Whirlpool Improves Free Cash Flow, Reduces Debt, Unlocks Value

The critical detail from Whirlpool’s Q4 report and outlook is the improving cash flow and balance sheet health. The company reduced its debt by 25% in F2024 and is on track to drastically reduce it in 2025. The forecast is for $700 million in debt paydown, sufficient to reduce the load another 15% and bring the long-term debt-to-equity ratio below 1.5x and likely lower. The efforts also improved shareholder equity by nearly 15% in 2024. 

The analysts’ response is positive. Few analysts track this stock, but the trends are positive, including a price target increase from Bank of America after the Q4 release. Analysts at the firm put the stock at $120, a 12% upside from critical support targets. The critical support target is near $105 and will likely spark a price rebound when reached. 

Whirlpool’s price plunged nearly 20% following the earnings release in a knee-jerk reaction to the news. The price action may wallow at this level over the next few weeks or months, but a rebound is likely because of the growth outlook, margin, cash flow, and capital return. The capital return in 2025 is primarily a dividend that yields roughly 5.5% at late January price points. The payout ratio is a bit high but sustainable and expected to improve significantly over the next two years.