Is Now The Time To Look At Buying Whirlpool Corporation (NYSE:WHR)?

Simply Wall St · 10/18 10:31

Whirlpool Corporation (NYSE:WHR), might not be a large cap stock, but it saw a decent share price growth of 16% on the NYSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Whirlpool’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Whirlpool

What's The Opportunity In Whirlpool?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Whirlpool’s ratio of 10.74x is trading slightly below its industry peers’ ratio of 12.43x, which means if you buy Whirlpool today, you’d be paying a reasonable price for it. And if you believe Whirlpool should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Whirlpool’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Whirlpool?

earnings-and-revenue-growth
NYSE:WHR Earnings and Revenue Growth October 18th 2024

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 51% over the next couple of years, the future seems bright for Whirlpool. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? WHR’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at WHR? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on WHR, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for WHR, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, Whirlpool has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you are no longer interested in Whirlpool, you can use our free platform to see our list of over 50 other stocks with a high growth potential.