Shares of Whirlpool Corporation (WHR) surged to attain a new 52-week high of $127.99 on May 10, 2013, before closing at $127.90, up 2.6% from the previous day’s session. This Zacks Rank #2 (Buy) stock has amassed a year-to-date return of roughly 20%.
Based on the current price, this leading manufacturer and supplier of major home appliances is 2.8% above the Zacks Consensus average analyst price target of $124.40. The company currently trades at a forward P/E of 12.84x, a 3.5% discount to the peer group average of 13.31x. Additionally, the company’s long-term estimated EPS growth rate is 28.2%, which is relatively healthy.
A decent positive earnings surprise history, an impressive 2013 outlook and a healthy dividend yield enabled the shares of Whirlpool to reach the new high.
With respect to earnings surprise, Whirlpool has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters, with the average positive surprise coming in at 2.8%. In the last concluded quarter, the company outdid Zacks’ expectations by 1.0%.
Whirlpool posted outstanding bottom-line results for the first quarter of 2013 on Apr 24. Adjusted quarterly earnings of $1.97 per share were higher than the year-ago quarter number of $1.41, and surpassed the Zacks Consensus Estimate of $1.95. The robust bottom-line performance was attributable to the company’s sustained focus on cost and capacity reduction initiatives, along with better price and product mix.
Buoyed by better-than-expected bottom-line results, Whirlpool reiterated its adjusted earnings guidance range of $9.25–9.75 per share in 2013, up 31–38% from 2012. Currently, the Zacks Consensus Estimate for 2013 is $9.72 per share.
Apart from the above mentioned factors, Whirlpool’s growth prospects look promising. We believe that the company’s sustained focus on developing new products along with its cost-reduction initiatives and diversification of business across the world to eliminate the geographical risks arising from concentration in one region, bode well for future growth.
Whirlpool is also known for its shareholder-friendly moves. Since 1983, the company has increased its quarterly dividend from 22.5 cents to 62.5 cents. This currently yields a solid 2.0%, with a payout ratio of 28.0%. We believe that its consistent dividend payments and increments reflect the growth potential of its earnings and its cash flow generation capabilities.
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