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Is Whirlpool About To Go Through The Wringer?

Summary

Whirlpool is a leading manufacturer of home appliances, with production in 12 countries and 13 brand name lines.

The company's size, distribution capability, and brand name appliances give Whirlpool a competitive advantage over most of its competition.

With an FCF yield of 5.50% and dividend yield of 2.10%, the shares appear to be reasonably priced.

After a series of worrisome earnings reports, Whirlpool (NYSE:WHR) appears to be back. In the most recent quarter, the company announced record revenue, up 9% to $5.3 billion. It was able to take advantage of capacity and cost reductions, as well as a favorable pricing and product mix and great results from recent acquisitions. Currency volatility is a common theme with multi-national companies; however, Whirlpool has been able to withstand the storm (mainly from the reduction in commodity prices).

Synergies with recent acquisitions appear to be moving along as planned, with American Dryer Corp. (NYSE:ADC) leading the charge. With the acquisition of ADC, Whirlpool gains significant exposure to the new commercial laundry markets and channels. This will help to further strengthen its competitive advantages in these new markets. Management see margin expansion in the next few quarters from the recent acquisitions.

Despite the recent operating success, Whirlpool has taken on considerable debt to acquire these companies. Regardless, it is not resting on its laurels, and the company is being active in positioning itself as the leader in home appliances. The recent joint venture with Ryan Builders (one of leading private homebuilders) as exclusive supplier of home appliances is one of many new initiatives management has taken to solidify the company's position in the market.

With the shares down over 25% from their recent highs, is the market trying to tell us something? Or is there an opportunity at the current levels?

Leading Home Appliance Manufacturer and Marketer

Whirlpool is a leading manufacturer of home appliances, with production in 12 countries and 13 brand name lines. The company's products are sold in almost every country in the world.

Its main segments include home laundry (27% of revenues), home refrigerators and freezers (28%), home cooking appliances (18%), and other (27%). Revenue in the U.S. accounts for ~50% of sales. The brand names include Whirlpool, Maytag, KitchenAid, Consul, and...


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