Whirlpool Corporation: High-Yield Value Spins Back Into Style

Key Points

• Whirlpool rises on mixed results. 
• Revenue was in-line but earnings and outlook were solid. 
• Repositioning and brand strength has growth on the table in 2024. 

Whirlpool Corporation NYSE: WHR stock price was corrected on fears the appliance manufacturer’s profitability would flag alongside the revenue in the post-COVID world but those fears are proving to be unfounded. The company’s Q4 results and outlook suggest that not only will this company’s business be stable in 2023 but its earnings will support the high-yielding dividend and share repurchases.

The takeaway is that short-sellers have a lot to do with why the prices are down, and now they may have a reason to get out. The stock is trading below 10X its earnings and pays about 4.5% in yield along with the strong results, and those are 3 good reasons to buy it. The way the outlook for S&P 500 earnings growth is going, Whirlpool Corporation and other high-yield values could easily see the market start flooding back. 

Whirlpool Corporation Positions For Growth 

Whirlpool Corporation produced mixed results for Q4, but the takeaway is underlying strength despite the COVID-let down. The company produced $4.92 billion in revenue, which is down 15.5% YOY and only in line with the Marketbeat.com consensus estimate, but core operational strength and earnings are where it counts.

Revenue weakness was most notable in EMEA where the exit-from Russia and economic weakness are impacting results. North America was impacted by a 1-off supply chain factor that shaved 500 basis points off the top line results. 

The company recorded a margin contraction that left the GAAP earnings in negative territory and adjusted earnings down roughly 40% YOY due to the supply chain disruption. Even so, the $3.89 adjusted EPS is $0.60 better than expected and helps the company maintain a fortress balance sheet. 

“During 2022, we took decisive actions to accelerate our long-term growth trajectory by investing in our business and executing our portfolio transformation while also returning $1.3B in cash to shareholders," said Jim Peters, the chief financial officer of Whirlpool Corporation. "The strength of our balance sheet has allowed us to execute on our capital allocation priorities, and we continue to maintain flexibility with $2B of cash on hand as we exit the year."

And the guidance is favorable as well. The company expects adjusted and continuing EPS to come in the range of $16 to $18 versus the $16.84 expected by the analysts.

This figure opens the door to outperformance and/or a round of analyst upgrades and is aided by an expected $800 to $900 million in price adjustments. The takeaway is that capital returns are safe and should be expected to continue in 2023 while the business transformation takes effect. 

Whirlpool Is A High-Yield Value 

Whirpool offers value and a high yield for investors at the current price levels. The stock is trading at less than 10X the low end of its earnings guidance and is paying a safe 4.5%. The payout ratio is a cool 43% of earnings, also at the low end, so investors can expect a 13th consecutive dividend increase.

Share repurchases totaled $0.9 billion and effectively tripled the value of the dividend in relation to shareholder value.  

The chart shows Whirlpool bottoming and on the verge of a reversal. The premarket action has the stock up more than 1.5% and tickling 5-month high levels. A reversal is technically confirmed if the market can get above those levels, near $158, and hold them. If not, this stock may continue to wallow near recent levels while it proceeds with reinvestment, repositioning and growth efforts.