Appliance maker Whirlpool (NYSE:WHR) has been a mainstay of American homes for decades. But it just took a substantial hit today, down over 15% in the closing minutes of Thursday afternoon’s trading. The biggest reason was a brutal hit from Bank of America, whose analysts not only cut the price target down to a Street low but pretty much led to Whirlpool seeing a share price low it hasn’t seen in three years.
So why did Bank of America analysts, led by Elizabeth Suzuki, hit Whirlpool this hard? Concerns about free cash flow were a major part of the problem, reports noted. It certainly wasn’t the impact of the earnings report; Whirlpool’s earnings featured beats all around, with earnings per share coming in at $5.45, handily beating the consensus of $4.27.
Revenue came in at $4.93 billion, nicely ahead of the $4.81 billion analysts looked for and offering a 3.1% jump over 2022’s third quarter. However, there was one issue with this that Bank of America couldn’t help but catch: most of the earnings gains were the result of cost-cutting at Whirlpool, not improved sales.
And that was a point Whirlpool itself reinforced with its full-year profit outlook. In fact, Whirlpool pared back the full-year figures, noting that it was pushing promotional offers and still watching sales decline as consumers pulled back on buying big-ticket items like most of Whirlpool’s product line.
Now, Whirlpool looks for adjusted earnings to come in around $16 per share for the year, which will miss analyst expectations of $16.17. It’s still within the original projected range, but just barely, as the earlier range was between $16 and $18 per share.
Is Whirlpool a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on WHR stock based on one Hold and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average WHR price target of $87 per share implies 17.92% downside risk.
