Stockchase Opinions

Brian Kelly Whirlpool Corp WHR-N COMMENT Jul 07, 2021

It depends on the continued DIY trade by homeowners and the hot housing market. JPMorgan just downgraded it.

$222.280

Stock price when the opinion was issued

household goods
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BUY
Sales slightly disappointed, but management said it would sell its ailing European business. Shares dipped on the former news, then rose on the latter. A great brand name, are buying back shares (and maybe more), good balance sheet, trades under 7x earnings and pays nearly a 4% dividend. They have intrinsic value, according to Warren Buffet.
BUY
AHY: Accidental high-yielding stocks that have fallen so far that their dividends now pay huge. Are struggling as the housing market peaks. Their most recent quarter was ugly. Pays nearly 4% in dividends and doing massive share buybacks. Are selling their lagging European business.
COMMENT
They report Thursday. It's been a dog because higher rates have dampened renovations, but if they sell their European business this will be a huge buy.
PARTIAL BUY

Bought this last May. A pandemic play that overcorrected after the pandemic as if the consumer was going to die. It didn't. It's down 20% recently on weak guidance. But she added shares today. Trades at 7x PE, pays a 7% dividend, makes $16 EPS to cover a $7 dividend, and their inventory is returning to normal a lot faster than they expected. Will buy more tranches if this declines more.

RISKY

Stay-at-home impact wore off. Mismanagement plus bad luck. Inexpensive 7x earnings, speculative buying opportunity if economy does well. Don't bet the farm. It will either be a win or a loss. Great dividend yield of 6.5%. Alluring, but 80% payout ratio, so be careful. If not working out, hit the exit quickly.

RISKY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

WHR has largely been on a downtrend since mid-2021, however, since late 2023, its price has been trending up. It pays a nice dividend of 6%, but sales have been largely flat over the past several years, and its debt levels have crept up (3.8X net debt/EBITDA). Its free cash flows are OK, but it is drawing from its cash balance to pay down debt and service dividends. As a result, its equity balance has been declining over the years. It trades at a cheap valuation, but this is likely reflecting its weakening results. As an income name, we think it is OK, but we are not overly excited by the name here.
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DON'T BUY
Was kicked off the S&P in March

Has been hurt by consumers who won't buy big-ticket items, and by weak homebuilding stats

PARTIAL BUY
Will it keep rallying if interest rates rise?

Yes. But he didn't like their international deal. A cheap stock. It's in the same boat as Best Buy.

SELL

He didn't like their quarter at all. It's in the penalty box and has had a slight bounce.

WATCH

Chart shows a downtrend -- both peaks and troughs are going lower. Also, he's assuming it's below its 200-day MA. Going back to June 2024, there's some support around $90. If it bounced off, may be the end of the downtrend. But until that happens, at best it's consolidating with a big question mark.