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WHR – Market expectations are for Uniform ROA to flatten, and management may be concerned about supply chain headwinds, margins, and the housing market

November 23, 2020

  • Whirlpool Corporation (WHR:USA) trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 14.3x Uniform P/E. At these levels, markets have expectations for profitability to flatten, and management may be concerned about margins, supply chain constraints, and housing market economics
  • Specifically, management may lack confidence in their ability to achieve their long-term margin guidance and may be concerned about their decision to ramp capex spend. In addition, they may have concerns about supply chain constraints, structural costs, and their short backlog. Moreover, management may have concerns about their decision to reduce promotions and about their ability to supply newly constructed homes. Finally, they may be exaggerating their focus on reducing leverage and they may have concerns about the sustainability of housing market tailwinds