of stocks Whirlpool Corporation WHR recorded a 17.1% increase on June 26, 2024 after market speculation emerged that Bosch was interested in acquiring the US home appliance manufacturer. Following the news, WHR rose 19.1%, reaching $103.62 before closing at $101.91.
German engineering and auto parts maker Bosch is reportedly in talks with advisers about a possible acquisition of Whirlpool, which is currently valued at $5.6 billion, but executives from both companies have declined to comment on the matter.
Bosch’s interest in acquiring Whirlpool stems from its desire to diversify beyond its automotive business following slowing sales of electric vehicles. The company is looking to expand its share of the home appliance business amid tough competition from Asian markets. Given Bosch’s expansion plans, Whirlpool’s strong market positioning, including well-known washing machine and refrigerator brands such as Maytag and KitchenAid, makes it an easy acquisition choice.
It’s worth noting that Whirlpool shares had fallen 38.1% over the past 12 months prior to yesterday’s surge. With a Zacks Rank #4 (Sell), the company’s shares have underperformed the 36.4% decline of the Zacks Home Appliances industry and the broader Zacks Consumer Discretionary sector’s 8.1% growth.
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Whirlpool’s Troubles
WHR’s struggles are evident from ongoing challenges due to a soft discretionary spending environment. The company recently completed a strategic review of its EMEA operations and undertook significant restructuring activities, including Whirlpool merging its European operations with Turkish competitor Arcelik. Additionally, WHR sold the Middle East and North Africa portion of its EMEA operations.
Additionally, Whirlpool is taking early and decisive actions on schedule to protect margins and productivity in the face of continuing supply chain constraints and inflationary pressures. The Company has implemented cost-reduction measures, including reducing structural and discretionary costs, taking advantage of lower raw material prices, effectively managing working capital, and aligning its supply chain and labor to demand. Whirlpool recently announced plans to reduce its workforce by approximately 1,000 positions to boost margins.
Consumer sentiment hurts earnings and outlook
Whirlpool is facing softening global demand and unfavorable price/mix. In the first quarter of 2024, the company experienced softening demand trends across Europe due to persistent softening demand trends and unfavorable price/mix. Additionally, sales across North America were impacted by unfavorable price/mix.
WHR noted that challenging market conditions, declining demand trends and unfavorable pricing/mix will continue to weigh on its 2024 results. Management expects net sales to be $16.9 billion in 2024, down 13.1% year over year. On a GAAP and continuing basis, Whirlpool expects earnings per share to be in the range of $5.00-7.00 and $13.00-15.00, respectively. Notably, in 2023, WHR reported earnings per share of $8.72 on a GAAP basis and $16.16 on a continuing basis.
The Zacks Consensus Estimates indicate Whirlpool’s 2024 revenue and earnings will decline 13.6% and 23.5%, respectively, from the year-ago period’s actual results.
Conclusion
The speculation has not been confirmed by either company, but the news sent Whirlpool’s stock soaring to new heights. Whether Whirlpool’s stock can withstand the rally remains to be seen, however, given the company’s challenging fundamentals. For Bosch, on the other hand, this could be a big opportunity to expand into the home appliance sector, if the deal goes through.
Discretionary Stocks to Watch
Among the top-ranked consumer goods companies are: G-III Apparel Group GIII, Crocs CROX and Speculation GESE.
G-III Apparel manufactures, designs, and sells licensed, private-label and in-house branded apparel and accessories. The company currently carries a Zacks Rank of #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel’s earnings estimates over the past four quarters have risen 571.8% on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 earnings indicates an increase of 3.3% from the year-ago period’s reported level.
Crocs, a leading footwear brand that combines comfort and style, is currently a Zacks Rank 2 (Buy). Crocs’s earnings outlook for the past four quarters has grown by an average of 17.1%.
The Zacks Consensus Estimates for CROX’s 2024 revenue and EPS indicate increases of 4.4% and 5.2%, respectively, from the year-ago period’s reported levels.
Guess designs, sells, distributes and licenses casual apparel and accessories for men, women and children that cater to American lifestyles and European fashion sensibilities. GES is currently sporting a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Guess’s sales for the current fiscal year suggests growth of 11.7% from the prior-year reported figure. GES’s earnings outlook has averaged 31% over the past four quarters.
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Whirlpool Corporation (WHR) : Free Stock Analysis Report
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