August 16, 2017

Whirlpool: If a FOOL would buy the stock, are you a fool to buy the washer?

whirlpool motley fool

Whirlpool announced its quarterly financial results today and Ryan Fuhrmann over at the MotleyFool seems to think that Whirlpool might just be a stock to invest in these days.

Although the company is reporting growth on overseas markets like Brazil (12%) and India (5-10%), it anticipates shrinking in its core North American and European markets (down 2-3%). The retreating housing market and tightening economy limit the available market size, and the company depends on a small group of stores (Sears, Lowes, Home Depot and Best Buy) for most of its sales.

So why buy if the company is shrinking? Because the company expects to get more efficient and cut down its cost base. Management expects to wring out hundreds of millions in “significant efficiencies” over the next couple of years, culminating in $400 million in projected savings in 2008. Where will these efficiencies come from? Whirlpool is counting on cost-cutting from last year’s acquisition of arch-rival Maytag.

With the acquisition Whirlpool“>Whirlpool wiped out a major competitor and boosted its place as a dominant appliance supplier. Hopefully its efficiencies and cost cutting will come in to form of eliminating redundancies, and not in the form of dropping engineering and manufacturing standards.

Time, and customer feedback will tell.

Over at the FOOL Ryan writes:

Fortunately, Whirlpool“>Whirlpool has proven adept at introducing appealing new products and controls a number of well-respected brands, namely Whirlpool, Kenmore, and KitchenAid, as well as Maytag, Jenn-Air, and Amana (acquired from Maytag). Overall, I believe a seasoned operating model, reasonable valuation, cost-cutting opportunities, and international growth prospects outweigh concerns about slow domestic growth and near-term housing woes.

So buy the stock, but keep an eye on the forums to see if you should buy Whirlpool products.

Comments

  1. The Home Smithy says:

    With the pending sales of General electrics line of appliances this would be an excellant time to purchase some Whirlpool stock. If anything the GE appliance line will have to go through the transformation period and this always shakes up an orgonisation as large as the multi billion dollar GE appliance section. The number of available GE units will fall off if only temporasrily and when the new super dooper screaming eagle washer isnt available then peoiple asre going to be buying the hot new Meile made washer from Whirlpool.
    But that is just how I perceive it. I dont play the stock market.