WHR - Whirlpool: A Vortex Stock Because Of Its Balance Sheet
2024-05-29 05:44:58 ET
Summary
- Whirlpool, the most important appliances company in America, is seeing a sharp decline in its share price.
- Because of the cyclicality of its business model and bad capital allocation decisions, WHR's balance sheet is suffering.
- WHR stock is a difficult buy at this point, there is still too much risk for the company and the balance sheet if the market does not recover quickly.
- WHR is a direct bet on the Fed cutting interest rates sooner rather than later.
Whirlpool ( WHR ) is the most important participant in the Major Appliances segment in North America and Latin America. Besides, the company is seeing a sharp decline in its share price, first because of the heavy cyclical nature of the business and secondly because of an overleveraged balance sheet resulting from poor capital allocation done by the management since the second half of 2021. At this point, WHR is valued at the same prices as in the most recent severe crisis, in March 2020, but that does not mean it is an easy buy since now, it is a worse company. For the time being, I consider Whirlpool to be a hold. Because of its cyclical nature and poor balance sheet, the company has become way more vulnerable to interest rates. While macroeconomic conditions continue to be rough, the stock can continue to fall without an absolute bottom....
Whirlpool: A Vortex Stock Because Of Its Balance Sheet