NEW YORK, July 24 — Home appliance maker Whirlpool is a bargain at US$192 (RM822) a share and could jump as much as 35 per cent to US$260 a share in the next year, according to a fund manager who owns the company’s shares, Barron’s reported.
Stephen DeNichilo, portfolio manager of the Federated Kaufmann Large Cap fund, notes that Whirlpool has doubled sales to US$21 billion since 2000 while reducing its cost base by US$4.7 billion since purchasing Maytag in 2006.
The stock has gained about 90 per cent since the end of 2012, but it remains a bargain, Barron’s said. At US$192, it trades for just under 13 times the 2017 estimated adjusted earnings figure and has risen just 6 per cent in 2017, versus 9 per cent for the overall market.
Rival Electrolux, which owns Frigidaire, is up 24 per cent this year.
“Whirlpool gets no credit for fantastic execution since housing began to turn around in 2011,” DeNichilo said in the report.
If Whirlpool hits consensus 2018 earnings estimate of US$17.40 a share and can trade at a 15 times multiple, the company’s stock price could move to US$260, as investors appreciate its strengths, DeNichilo said.
Zachary Mannes, lead analyst at Stock Waves, part of ElliottWaveTrader.net, a technical-analysis trading community, said that based on investor sentiment, Whirlpool will turn sharply higher if it can break through US$203 per share. If that happens, Mannes told Barron’s, the next stop would be in “the US$350 region.”
However, Whirlpool does have critics, many of whom target the entire home appliance industry. In fact, 6.4 per cent of Whirlpool’s shares have been sold short. One major argument is that the North American replacement cycle for large appliances has peaked and is heading down.
Bearish investors see this as worrisome for Whirlpool, which holds a leading 40 per cent share in such markets, Barron’s noted. — Reuters
