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Factors Likely to Influence Whirlpool's (WHR) Earnings in Q4

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Whirlpool Corporation WHR is slated to release fourth-quarter 2021 results on Jan 26, after the closing bell. The household appliance company is expected to have witnessed revenue growth in the to-be-reported quarter. For fourth-quarter revenues, the Zacks Consensus Estimate is pegged at $5.85 billion, suggesting 0.9% growth from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for its fourth-quarter earnings stands at $5.84, indicating a 12.1% decline from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days.

The company delivered an earnings surprise of 8.6% in the last reported quarter. The bottom line beat estimates by 14.8%, on average, over the trailing four quarters.

Whirlpool Corporation Price and EPS Surprise

Whirlpool Corporation Price and EPS Surprise
Whirlpool Corporation Price and EPS Surprise

Whirlpool Corporation price-eps-surprise | Whirlpool Corporation Quote

Key Points to Note

Whirlpool’s top line has been benefiting from strong customer demand and the execution of its cost-based pricing initiatives. Gains from cost-saving endeavors, which include curtailing structural and discretionary costs, capturing raw material deflation opportunities, effectively managing working capital, and syncing the supply chain and labor levels with demand, are likely to have aided margins in the fourth quarter. Price mix and net cost actions have been significantly offsetting the increase in raw material costs. This is expected to have boosted the operating margin in the fourth quarter.

Ongoing cost productivity initiatives are expected to have resulted in net cost margin improvement in the to-be-reported quarter. The productivity initiatives have been significantly offsetting the increase in logistics, labor and other ongoing supply-chain costs.

On the last reported quarter’s earnings call, management noted that the company is on track to navigate through the industry’s challenges and deliver strong performance in the upcoming quarters, indicating optimism for the fourth quarter.

Whirlpool envisioned net sales growth of 13% and an EBIT margin of 10.8% for 2021. The EBIT margin is likely to benefit from price mix growth of 600 bps. The company’s raised expectations of net cost-savings to 200 bps, backed by improved efficiencies and continued focus on cost productivity, are likely to have boosted margins in the to-be-reported quarter as well.

GAAP earnings per share are expected to be $27.80-$26.95, with adjusted earnings of $26.25 per share. The bottom line is expected to gain from additional investment in Elica PB India and lower restructuring charges.

However, raw-material inflation, particularly led by higher steel and resin costs, is likely to have weighed on the fourth-quarter performance. The company has been witnessing inflationary pressures in steel and resins for the past few quarters. It noted that it has been monitoring the global cost inflation, largely in steel and resins. This is expected to have been a headwind in the fourth quarter.

Whirlpool has also been witnessing pressures related to the global supply-chain disruptions and rising raw material costs. The supply-chain disruptions have been resulting in higher freight costs.

On the last reported quarter’s earnings call, management anticipated inefficiencies across the supply chain, particularly in distribution and labor, to continue. It continues to expect supply-chain disruptions and rising raw material costs to negatively impact its business by nearly $1 billion in 2021.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Whirlpool this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Whirlpool has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Crocs CROX has an Earnings ESP of +7.09% and it currently sports a Zacks Rank of 1. The company is expected to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for CROX’s quarterly revenues is pegged at $585.2 million, which suggests growth of 42.2% from the prior-year quarter’s reported figure.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Crocs’ quarterly earnings has moved up 23% in the past seven days to $1.87 per share, suggesting 76.4% growth from the year-ago reported number. CROX has delivered an earnings beat of 41.6%, on average, in the trailing four quarters.

Tractor Supply Co. TSCO currently has an Earnings ESP of +0.55% and a Zacks Rank #2. TSCO is likely to register top and bottom-line growth when it reports the fourth-quarter 2021 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.2 billion, which suggests growth of 11.65% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Tractor Supply’s quarterly earnings has been unchanged in the past 30 days at $1.83 per share, suggesting growth of 11.6% from the year-ago quarter’s reported number. TSCO has delivered an earnings beat of 22.8%, on average, in the trailing four quarters.

Central Garden & Pet CENT currently has an Earnings ESP of +100.0% and a Zacks Rank #2. CENT is anticipated to register top-line growth when it reports the fourth-quarter 2021 results. The Zacks Consensus Estimate for Central Garden’s quarterly revenues is pegged at $619.7 million, indicating an improvement of 4.6% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Central Garden’s bottom line has moved down 5 cents in the past seven days to 1 cent per share. The consensus estimate suggests a decline of 96.4% from the prior-year quarter. CENT has delivered an earnings beat of 46.1%, on average, in the trailing four quarters.

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