Monday, April 26, 2010

Whirlpool beats big, raises full year guidance for earnings and Free Cash Flow (WHR)


Appliance-maker Whirlpool beat the stuffing out of earnings estimates for the first quarter, as EPS came in at $2.13 per share versus the $1.33 Wall Street had expected.  Of seven published estimates, the highest was 1.57.

Like many other earnings beats, Whirpool's conservative inventory stance set the stage for high operating leverage:


From today's release:
"We are pleased with the strong operational performance we reported in all of our regions," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation.  "In addition, we are encouraged with the 18 percent increase in our global unit volumes during the quarter.  Our results reflect our lower breakeven point, continued innovation investment, and our expanding global product offerings.  By continuing to drive productivity improvements and leveraging our lower breakeven point, we are able to expand our operating margins and accelerate profitable growth."
For the full year, Whirlpool is increasing EPS guidance to about 8.25 per share, versus the street's consensus at 7.08.  Net of $15 in balance sheet cash, that makes for a PE of just over 10x this years results.

Geographically, Whirpool looks to have LOTS of upside.  Asia and Latin America make up 29% of sales, and  grew over 40% in the recent quarter.  Management's earnings guidance might prove to be conservative, judging by the full year estimates they're using for emerging economies, compared to their growth in q1.

The company increased full year Free Cash Flow guidance to about $550million, up about $100million from its previous estimate.  If the company hits the higher-end of their target, then Free Cash Flow Yield (net of $1.2billion in balance sheet cash) would be 9.3%, nice and juicy compared to their 5.5% cost of 5-year debt...
Copyright 2010 AlphaNinja

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