Introduction
After today’s price drop, and frankly even before that, I thought that Whirlpool Corporation (WHR) represented a unique opportunity to invest in the world’s oldest and largest appliance manufacturer at extremely undervalued levels. I understand that there have been issues, but I see nothing that would suggest that the price should be this low. Whirlpool is a worldwide distributor of large and small appliances. These would include laundry appliances, refrigerators, freezers, cooking appliances dishwashers, mixers, and other small domestic appliances. Recent weak EMEA (Europe, the Middle East, and Africa) results, tariff concerns, increasing raw material costs, increasing freight costs and lowered earnings guidance have all contributed to investor concerns. Yet despite all of this, the consensus of leading analysts following the company expect double-digit growth going forward. Consequently, I believe this is a time to be greedy while others are fearful.
From a financial perspective, future rewards appear exceptional. The current dividend yield is approaching 4 ½%, and the dividend has increased at an average growth rate of more than 16% since 2012. The company has more than $1 billion in cash, and both operating cash flow and free cash flow are forecast to be very strong for this fiscal year and next. Consequently, I think their dividend is extremely well covered and positioned to grow going forward. Furthermore, I believe the company offers both above-average yield and significant intermediate-term appreciation potential based on its extremely low valuation. Therefore, I believe Whirlpool offers a compelling mid to long-term opportunity for both income and growth-oriented investors.
About Whirlpool
Headquartered in Benton Harbor, Michigan, Whirlpool Corporation is an iconic brand that was founded in 1898. Whirlpool is a worldwide manufacturer of home appliances and related products. The company has operations across The Americas, Western and Eastern Europe, and Asia holding dominant market share positions in each region. Their major brands include Whirlpool, Maytag, KitchenAid, Indesit, Consul, and Royalstar.
The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Gladiator GarageWorks, Inglis, Estate, Brastemp, Bauknecht, Ignis, Indesit, and Consul. Whirlpool Corporation is the world’s largest home appliance maker. Their website also mentions Hotpoint, Diqua, Affresh, Acros, and Yummly brands.
