Source : investing, Tue, 2024/7/30, 13:35
Bank of America Securities on Tuesday updated its position on Whirlpool Inc. (NYSE: WHR), setting an Underperform rating with a target price for the share at $88.00. The new rating reflects a shift from a previous position of non-rating, driven by dispelling M&A speculation.
The change in outlook arose after Bosch stated that its focus would be on consolidating its recent acquisition of JCI’s light business and HVAC residential assets over the next year, leading to Whirlpool’s stock valuation based on its fundamentals..
Whirlpool recently announced adjusted earnings per share (EPS) for the second quarter of 2024 at $2.39, in line with market estimates. This result was influenced by the challenges faced by the company in North America that balanced the best performance in international markets.
Despite these headwinds, the company’s management revised its revised guidance for adjusted earnings per share for the whole of 2024 to around $12, down from the previous forecast of $13-$15..
BofA Securities anticipates potential difficulties in achieving the updated guidance, suggesting that it assumes an improvement in the latter half of the year. The company’s analysts expect Whirlpool’s 2024 earnings per share to be 13% lower than agreed estimates as well as the company’s own guidance..
The price target of $88 is based on a 7 times the estimated 2025 EBITDA multiplier.
Whirlpool’s recent performance and revised forecasts are key factors influencing its stock trajectory, as the company focuses on navigating the current economic landscape without the impact of potential M&A activity. The target share price and rating provided by Bank of America Securities reflect a cautious view of the company’s ability to achieve its financial objectives in the coming periods.
In other recent news, Whirlpool reported strong performance in the second quarter with a 100 basis point expansion in global margin and strong growth in its global Small Appliances (SDA) business..
Despite pressures from the U.S. housing market, the company reiterated its guidance for its fixed net sales of $16.9 billion for the year and revised its current EBITAT margin to 6%. Whirlpool also plans to return $400 million to shareholders in dividends, and expects a free cash flow of approximately $500 million this year..
JPMorgan revised its outlook for Whirlpool, raising its price target to $103.00 from $98.00 previously, while maintaining a neutral rating for the stock. This adjustment follows Whirlpool’s second-quarter conference of the company’s second-quarter phone call, where the company reviewed its operating profit margin and operating profit margin for 2024..
Whirlpool now expects a margin of around 6.0% and an operating earnings per share of $12.00, representing declines of 80 basis points and 14%, respectively, due to continued weak discretionary demand in North America..
Although the Operating Profit Margin Guidelines before Interest and Tax have been revised down due to continued discretionary demand pressures in the US housing market, Whirlpool’s international business in Asia and Latin America generates positive cash flows. The company also expects the profit margin to expand to around 9% by the end of the year. These are the latest developments in the company’s performance and expectations..
As Whirlpool (NYSE: WHR) faces a reassessment of its financial outlook by Bank of America Securities, real-time data from InvestingPro provides additional context for investors. The company’s market capitalization is $5.45 billion, with a P/E ratio of 10.02, reflecting an assessment that can be considered reasonable in the context of its industry. However, given the month-adjusted price-to-profitability ratio The last twelve as of the second quarter of 2024, which stands at 7.55, it is clear that investors evaluate future earnings more positively.
InvestingPro’s advice highlights some important aspects of Whirlpool’s financial health and future outlook. Despite analysts reviewing its downward earnings for the coming period, Whirlpool has maintained dividends for 54 consecutive years impressively, providing a significant dividend yield of 7.04% from the end of 2024. This may appeal to income-focused investors, especially in a challenging market environment. In addition, while analysts expect a decline in sales in this year, however, Whirlpool has made profits over the past twelve months, which may provide some reassurance about the company’s ability to weather economic headwinds.
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