Whirlpool Corporation WHR stock has rallied 22.1% in the past three months. It has comfortably outpaced the broader Consumer Discretionary sector’s return of 4.5% and the Zacks Household Appliances industry‘s growth of 17.6% in the same period. WHR shares have also surpassed the S&P 500 index’s appreciation of 2.4% in the past three months.
WHR Stock's Three Months Performance
Image Source: Zacks Investment Research
Currently priced at $128.87, WHR is trading above its 50-day and 200-day simple moving averages (SMAs), highlighting a continued uptrend. This highlights its stability and suggests a strong long-term bullish trend, positioning WHR as a key stock to monitor in the Consumer Discretionary space.
WHR Trades Above 50 & 200-Day Moving Averages
Image Source: Zacks Investment Research
Key Drivers Behind Recent Surge in WHR Stock
A key driver for the upswing in Whirlpool stock is its relentless focus on product innovation, which is critical for future growth and margin expansion. Recent launches in its laundry and kitchen categories, such as the Fresh Flow Vent System, Pet Pro Filter and KitchenAid's first four-door refrigerator, showcase its commitment to enhancing consumer convenience and addressing specific needs. The expansion of the KitchenAid Go Cordless system further highlights its innovation. With a strong lineup of launches planned for 2025, Whirlpool is poised for growth, improved price/mix and strengthened market leadership.
Another key factor aiding Whirlpool's stock growth is its effective cost-takeout initiatives, which have protected margins and enhanced productivity. The company has streamlined its organization, reduced costs, optimized working capital and aligned supply chain and labor levels with demand. These efforts have contributed to consistent margin improvements, supported by pricing strategies in North America. Looking ahead, Whirlpool anticipates further savings through automation and supply chain efficiencies, reinforcing its strong market performance.
Whirlpool's strategic pricing actions have resulted in sequential EBIT margin expansion, particularly in North America. It was observed that promotional investments in the United States were not driving the expected volume increases, as strong replacement demand led to a lower product mix, diminishing promotion effectiveness. To address this, the company implemented a 5% weighted average increase in its promotional pricing program for MDA North America, effective April 25, 2024.
Challenges Facing Whirlpool's Stock
Despite all the positives, the persistent global demand softness and an unfavorable price/mix have been hurting the company’s performance for a while. In the third quarter of fiscal 2024, North American sales declined 4.3% due to these factors, while SDA Global sales dipped 3% amid weak consumer sentiment.
Management expects a tough macro backdrop in the United States, at least in the near term. Despite the recent interest rate cut, the U.S. housing market is witnessing higher mortgage rates. Consequently, demand in the United States has shifted heavily toward low-margin replacement, led by purchases, and the high-margin discretionary demand remains weak on sluggish home sales. However, the housing market is poised for an eventual rebound.
Whirlpool reaffirmed its sales guidance for 2024, anticipating net sales of $16.9 billion, down from $19.5 billion reported in the year-ago period. The company anticipates an ongoing EBIT margin of roughly 6%, indicating a decrease from 6.1% reported in 2023.
Final Thought on WHR Stock
Whirlpool has delivered a strong performance, driven by successful cost-takeout initiatives and product innovation. These efforts have supported margin expansion, particularly in North America, and boosted investor confidence, contributing to its solid stock performance.
However, the company faces near-term challenges, including global demand softness, unfavorable price/mix dynamics and macroeconomic pressures in the U.S. housing market. Potential investors may benefit from waiting for a more favorable entry point, while current stakeholders might consider holding the stock given its strong fundamentals and promising long-term outlook. Whirlpool currently has a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Consumer Discretionary space are Wolverine World Wide WWW, Ralph Lauren Corporation RL and Steven Madden, Ltd. SHOO.
Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 22% from the year-ago figure. The consensus mark for EPS indicates significant growth to 90 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 17.03%, on average.
Ralph Lauren, which designs, markets, and distributes lifestyle products, currently carries a Zacks Rank #2 (Buy). RL has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings indicates growth of 3.6% and 13.9%, respectively, from the prior-year reported levels.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.
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Free: See Our Top Stock And 4 Runners UpWhirlpool Corporation (WHR) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report
Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
