Whirlpool Corporation (WHR) Showing Signs Of Being A Roof Leaker

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Whirlpool Corporation ( WHR) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Whirlpool Corporation as such a stock due to the following factors:

  • WHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $249.3 million.
  • WHR has traded 216,789 shares today.
  • WHR is trading at 1.79 times the normal volume for the stock at this time of day.
  • WHR crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on WHR:

Whirlpool Corporation engages in the manufacture and marketing of home appliances worldwide. The company's principal products include laundry appliances, refrigerators and freezers, cooking appliances, dishwashers, mixers, and other portable household appliances. The stock currently has a dividend yield of 1.8%. WHR has a PE ratio of 13.8. Currently there are 3 analysts that rate Whirlpool Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Whirlpool Corporation has been 1.1 million shares per day over the past 30 days. Whirlpool has a market cap of $10.9 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.74 and a short float of 2.1% with 0.90 days to cover. Shares are down 11.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Whirlpool Corporation as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • WHIRLPOOL CORP has improved earnings per share by 48.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, WHIRLPOOL CORP increased its bottom line by earning $10.24 versus $5.06 in the prior year. This year, the market expects an improvement in earnings ($12.28 versus $10.24).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Household Durables industry average. The net income increased by 48.4% when compared to the same quarter one year prior, rising from $122.00 million to $181.00 million.
  • WHR's revenue growth trails the industry average of 29.1%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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