Home appliances manufacturer Whirlpool (NYSE:WHR) fell short of the market’s revenue expectations in Q4 CY2024, with sales falling 18.7% year on year to $4.14 billion. The company’s full-year revenue guidance of $15.8 billion at the midpoint came in 2.8% below analysts’ estimates. Its GAAP loss of $7.10 per share was significantly below analysts’ consensus estimates.

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"In 2024, we continued to make progress in our operations and delivered on our cost take out commitment of $300 million while achieving the closure of the Europe transaction, supporting our ongoing portfolio transformation," said Marc Bitzer.

Company Overview

Credited with introducing the first automatic washing machine, Whirlpool (NYSE:WHR) is a manufacturer of a variety of home appliances.

Electrical Systems

Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Whirlpool’s demand was weak and its revenue declined by 4% per year. This fell short of our benchmarks and is a sign of poor business quality.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Whirlpool’s recent history shows its demand has stayed suppressed as its revenue has declined by 8.2% annually over the last two years. Whirlpool isn’t alone in its struggles as the Electrical Systems industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Whirlpool missed Wall Street’s estimates and reported a rather uninspiring 18.7% year-on-year revenue decline, generating $4.14 billion of revenue.

Looking ahead, sell-side analysts expect revenue to decline by 4.1% over the next 12 months. While this projection is better than its two-year trend, it's hard to get excited about a company that is struggling with demand.

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Operating Margin

Whirlpool was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Whirlpool’s operating margin decreased by 7.4 percentage points over the last five years. The company’s performance was poor no matter how you look at it. It shows operating expenses were rising and it couldn’t pass those costs onto its customers.

In Q4, Whirlpool generated an operating profit margin of negative 3.3%, down 11.4 percentage points year on year due to a $381 million one-time goodwill impairment.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Whirlpool, its EPS declined by more than its revenue over the last five years, dropping 18.3% annually. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Diving into the nuances of Whirlpool’s earnings can give us a better understanding of its performance. As we mentioned earlier, Whirlpool’s operating margin declined by 7.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Whirlpool, its two-year annual EPS growth of 54.3% was higher than its five-year trend. Its improving earnings is an encouraging data point, but a caveat is that its EPS is still in the red.

In Q4, Whirlpool reported EPS at negative $7.10, down from $8.89 in the same quarter last year due to a $381 million goodwill impairment that is non-recurring. This print unsurprisingly missed analysts’ estimates. Over the next 12 months, Wall Street analysts forecast Whirlpool’s full-year EPS of negative $5.86 will normalize to positive $11.96.

Key Takeaways from Whirlpool’s Q4 Results

We struggled to find many resounding positives in these results. Its revenue missed, and its full-year adjusted EPS guidance missed significantly. Overall, this was a weaker quarter. The stock traded down 11.7% to $114.25 immediately after reporting.

Whirlpool didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.