Whirlpool Corporation - Value

Whirlpool's (WHR) red hot first half growth has slowed but sales in the emerging market continue to surge as the middle class expands. Shares are trading with a forward P/E of just 11.3.

Whirlpool manufactures home appliances, such as refrigerators, dishwashers, cooking and countertop appliances. As you would expect, the company's U.S. sales fell sharply during the recession and subsequent housing bust.

Early in 2010, however, sales in North America, the company's largest business segment, were robust.

The company had guided full year North American sales growth of 5% but on Oct 27, as sales slowed, Whirlpool lowered guidance to just 3%. In the third quarter, North American sales actually declined 3%.

Emerging Markets The Key

Still, Whirlpool is poised to reap the benefits of booming emerging markets. Brazil recently reported nearly full employment for the first time and more of the middle class are now buying homes.

In the third quarter, Latin America continued to see strong demand as sales jumped 13% to $1.1 billion, making it the second largest of the company's business segment after the $2.4 billion North American market.

In October, the company still expected 2010 Brazilian appliance shipments to increase about 10% from a year ago.

Asia is also a hot story. It produced the biggest sales increase, at 21%, to $195 million, but the segment is still small compared to Latin America. 2010 industry unit shipments are expected to increase 8% to 10%, which is up from previous expectations fo 5% to 8%.

Double Digit Earnings Growth Expected in 2010 and 2011

On Sep 30, the company cut its full year earnings estimate to a range of $7.80 to $8.30 as sales slowed in North America. The 2010 Zacks Consensus Estimate is currently calling for $7.95, which is still earnings growth of 47.5% over 2009.

In 2011, analysts see the double digit earnings growth continuing as the Zacks Consensus Estimate has risen 15 cents to $9.02 per share in the last month. This is earnings growth of 13.5%.

Whirlpool is a Value Stock

Despite a recent rally in the shares, there is still a lot of value in Whirlpool.

In addition to an attractive P/E, Whirlpool also has a price-to-book ratio of just 1.7, well within the range for a value stock of under 3.0.

With the double digit growth rates and low P/E, its PEG ratio is just 0.4. Its price-to-sales ratio is also a solid 0.4. All of these metrics are within the range of a value stock.

This Zacks #2 Rank (buy) also rewards shareholders with a dividend, currently yielding 1.9%.

Read the May 18, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

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The solar sector has been highly volatile in 2010. JA Solar Holdings Co. (JASO) has seen its shares battered this year but with strong growth projections and cheap valuations it is trading with a PEG ratio of just 0.4. Read the full article.

Retailers are having a jolly holiday season. The Finish Line, Inc. (FINL) reported fiscal third quarter results on Dec 21 and saw same store sales rise 10.1%. The company has attractive valuations, with a forward P/E of 13.2. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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