Why Whirlpool (WHR) Stock Is Falling Today

NEW YORK (TheStreet) -- Whirlpool (WHR) shares are down -1.1% to $139.20 on Monday after Fitch Ratings put the company on "rating watch negative" following its $1.04 billion purchase of a 47% stake of European appliance maker Indesit.

Fitch is critical of the purchase due to what it says is weak appliance demand in Europe, citing a 6.6% year over year decline in first quarter sales for Indesit.

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Separately, TheStreet Ratings team rates WHIRLPOOL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WHIRLPOOL CORP (WHR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WHR's revenue growth trails the industry average of 17.7%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that WHR's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($12.26 versus $10.24).
  • You can view the full analysis from the report here: WHR Ratings Report
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