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What Do Whirlpool’s Risk Factors Indicate?
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What Do Whirlpool’s Risk Factors Indicate?

Whirlpool Corp. (WHR) recently posted better-than-expected Q2 2021 results. The American multinational company is a manufacturer and marketer of home appliances like refrigerators, washing machines and air conditioners.

Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should be aware of.

Q2 revenue increased 31.7% year-over-year to $5.3 billion driven by strong consumer demand and volume growth, beating the Street’s expectation of $5.05 billion.

The CFO of Whirlpool, Jim Peters, said, “We delivered double-digit revenue growth, expanded EBIT in every region across the globe, and generated significant cash flow while navigating a challenging macroeconomic environment.”

The growth in the top line, along with cost-based price increases, helped earnings per share increase to $6.64 from last year’s $2.07, surpassing consensus estimate of $5.93. (See Whirlpool stock chart on TipRanks) 

Furthermore, the company has raised its full-year 2021 guidance and sees net sales growth of 16% versus the previous estimate of 13%. It expects earnings per share at $26, compared to earlier estimates of $22.50-$23.50.

The Chairman and CEO of Whirlpool, Marc Bitzer, said, “We are significantly raising guidance to reflect the strength of our business driven by sustained consumer demand and the successful implementation of our previously announced cost-based pricing initiatives.”

Following Whirlpool’s Q2 performance, RBC Capital analyst Michael Dahl reiterated a Hold rating on the stock, while increasing the price target to $222 from $210.

The analyst believes pricing and sales mix, along with short-term market dynamics, lend support to the near-term margins for the company. However, Dahl also sees risks in the long term from a more “Normalized” operating environment.

Based on 1 Buy and 3 Holds, consensus on the Street is a Hold. The average Whirlpool price target of $251 implies 14.1% upside potential. Shares have gained 24% so far this year.

Now, let’s look at what has changed in the company’s key risk factors profile.

According to the new Tipranks Risk Factors tool, Whirlpool’s two main risk categories are Finance & Corporate and Production, which account for 24% and 20%, respectively, of the total 25 risks identified. Since June, the company has changed one key risk factor under the Production category.

The company highlights that it uses a wide range of materials and components in its products, which come from a number of suppliers globally. Some of these parts come from a single supplier or a limited group of suppliers, which exposes Whirlpool to supply and pricing risks.

The company expects to continue to be impacted by issues like global shortage of semiconductors, a strain on raw materials and cost inflation. Any significant supply chain disruption could impact Whirlpool’s financial condition.

The Finance & Corporate risk factor’s sector average is at 35%, compared to Whirlpool’s 24%.

Related News:
Calix Delivers Upbeat Q2 Results; Shares Rise
Range Resources Posts Mixed Q2 Results; Shares Drop 3.1%
Brown & Brown Posts Upbeat Results in Q2

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