From the start of the year to Christmas Eve, Whirlpool has lost 39% or approximately $5.5 billion in market capitalization.
The home appliances maker's stock has been cut in half since reaching its all-time highs in 2015. With its more than 60 years of industrial experience, it is as if Whirlpool is going out of business at this rate.
To Wall Street’s credit, Whirlpool has failed to meet revenue expectations in the past five quarters. The company also missed two earnings estimates out of the recent four quarterly periods.
Back in April, Whirlpool forecasted for its 2018 free cash flow to be in the range of $1 billion to $1.1 billion along with full-year earnings of $12.30 to $13.30 a share.
Fast forward to October, Whirlpool has cut its free cash flow estimates to approximately $600 million and expected a full-year loss, instead of earnings, in the range of -$2.90 to -$2.60.
This fiscal year will be the first time in the past decade that Whirlpool will deliver an annual loss to its shareholders.
Several factors have affected Whirlpool’s bottom line: the company’s dispute with labor unions in Italy back in 2015 cost it $274 million; $579 million worth of goodwill in its Europe, Middle East and Africa (EMEA) operations were written off; and another $168 million of intangible assets in its EMEA and Asia Pacific operations were deducted from its earnings.
These write-downs resulted in a quarter of Whirlpool’s assets still labeled as goodwill and intangible assets as of September, down from 28% a year ago.
As of September, Whirlpool has doubled its balance sheet leverage to 3x debt to its shareholder equity compared to 1.24x a year ago.
Despite having lost its second spot in U.S. home appliance market share to LG in recent years, Whirlpool still managed to deliver acceptable growth in its domestic operations — 54% total sales — and in its Asia operations so far this year.
At a 50% stock price drop from its all-time high back in 2015, Whirlpool already has suffered one of its worst stock price performances in memory. To recall, the washing machine maker lost a little over 70% during the Great Recession period.
Meanwhile, analysts put a strong "hold" recommendation on the Whirlpool with a price target of $119.83 per share compared to its $101.72 price at the time of writing.
Looking at Whirlpool’s performance along with the company’s and analyst estimates, Whirlpool looks like a pass at the moment despite its attractive six-year high trailing dividend yield of 4.52%.
Disclosure: No shares in Whirlpool.
