WHR - Whirlpool: Dividend Cut Possible If 2024 Rebound Fails

2024-01-29 19:44:42 ET

Summary

• Whirlpool Corporation has faced negative earnings surprises and a 23% YoY decline in stock value due to low home sales and high interest rates.
• High interest rates harm the company's profitability by increasing debt and consumer costs and lowering demand through home affordability losses.
• Whirlpool's declining margins and struggling sales volumes indicate long-term issues exacerbated by temporary economic factors but point toward prolonged competitive difficulties.
• WHR has a low valuation, but the risk of a dividend cut rises as its free cash flow plummets.

Last February, I covered Whirlpool Corporation ( WHR ) in "Whirlpool: Poor Economic Prospects As Collapsing Home Sales Hit Appliance Sector." At that time, I had a bearish outlook for the stock due to my view that low home sales would naturally reduce demand for large appliances. Since then, WHR has lost around 20% of its value amid a series of negative earnings surprises. For the most part, my past view was proven correct over the past eleven months....

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