Can Whirlpool (WHR) Beat on Q2 Earnings Despite Inflation Woes?
Whirlpool Corporation WHR is slated to release second-quarter 2023 results on Jul 24, after the closing bell. The household appliance company is expected to have witnessed revenue and earnings declines in the to-be-reported quarter.
For second-quarter revenues, the Zacks Consensus Estimate is pegged at $4.85 billion, suggesting a 4.9% decline from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for second-quarter earnings has moved up 1% in the past seven days to $3.98. However, the consensus mark for earnings indicates a 33.3% decrease from the year-ago quarter’s reported figure.
The company delivered an earnings surprise of 24.3% in the last reported quarter. Also, the bottom line beat estimates by 8.1%, on average, over the trailing four quarters.
Whirlpool Corporation Price and EPS Surprise
Whirlpool Corporation price-eps-surprise | Whirlpool Corporation Quote
Key Points to Note
Whirlpool has been witnessing a challenging macro environment and sluggish demand from rising inflation. The company has been witnessing muted consumer sentiments from inflation and increasing interest rates, along with the ongoing war in Ukraine and unfavorable currency.
Global supply-chain disruptions and rising raw material costs have been hurting Whirlpool’s performance. The company has been witnessing elevated raw materials, freight and logistic costs, as well as energy costs. All these factors are expected to have marred its margin performance in second-quarter 2023.
We anticipate the company’s gross margin to contract 130 basis points (bps) in the second quarter of 2023. Gross profit is expected to decline 12.7% year over year in the quarter. Further, the company is likely to have witnessed an increase in SG&A expenses, weighing on its operating margin. Our model indicates a 3.1% increase in SG&A expenses on a year-over-year basis, with a 90-bps increase in the SG&A rate. The operating margin for the second quarter is expected to contract 200 bps to 7%.
Nonetheless, Whirlpool is on track with early and decisive actions to protect margins and productivity amid the ongoing supply-chain constraints and significant inflationary pressures. The company has been implementing cost takeout actions, including curtailing structural and discretionary costs, capturing raw material deflation opportunities, effectively managing working capital, and syncing supply chain and labor levels with demand.
It announced significant cost-based price increases of 5-18% in various countries. WHR also launched a cost takeout program worth $500 million, which is likely to have reduced fixed and variable costs. Management has been on track with its cost takeout actions and expects $800-$900 million related to gains from the aforementioned measures and eased raw material inflation.
On the last reported quarter’s earnings call, management pointed out that it was optimistic about the structural strength of its North America business. Management believed that its actions would aid in delivering strong results in North America. This is expected to include nearly 100 bps of sequential margin expansion in every quarter of 2023.
What the Zacks Model Says
Our proven model conclusively predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Whirlpool currently has a Zacks Rank #3 and an Earnings ESP of +5.21%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Marriott International MAR currently has an Earnings ESP of +8.09% and a Zacks Rank #2. MAR is likely to register top and bottom-line growth when it reports second-quarter 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $6.05 billion, suggesting 13.3% growth from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Marriott’s second-quarter earnings is pegged at $2.18, suggesting year-over-year growth of 21.1%. The consensus mark has moved up by a penny in the past 30 days.
Boyd Gaming BYD currently has an Earnings ESP of +4.14% and a Zacks Rank #3. BYD is likely to register bottom-line growth when it reports second-quarter 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $890.5 million, suggesting a 0.4% decline from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boyd Gaming’s second-quarter earnings is pegged at $1.57, suggesting 6.1% growth from the $1.48 reported in the year-ago quarter. The consensus mark has moved up by a penny in the past 30 days.
Netflix NFLX currently has an Earnings ESP of +2.01% and a Zacks Rank #3. Netflix is likely to register top-line growth when it reports second-quarter 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $8.3 billion, suggesting 3.7% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Netflix’s second-quarter earnings is pegged at $2.82, suggesting an 11.9% decline from the $3.20 reported in the year-ago quarter. The consensus mark has moved up by a penny in the past seven days.
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Marriott International, Inc. (MAR) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Whirlpool Corporation (WHR) : Free Stock Analysis Report
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
