Whirlpool Corporation Valuation – December 2016 $WHR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Whirlpool Corporation (WHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Whirlpool Corporation is a manufacturer and marketer of home appliances. The Company manufactures products in approximately 15 countries and markets products around the world under brand names, such as Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Jenn-Air and Indesit. The Company’s segments include North America, Latin America, EMEA (Europe, Middle East and Africa) and Asia. The Company manufactures and markets a line of home appliances and related products. Its principal products are laundry appliances, refrigerators and freezers, cooking appliances, dishwashers, mixers and other portable household appliances. It also produces hermetic compressors for refrigeration systems. In the United States, it market and distribute products primarily under the Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Roper, Admiral, Affresh and Gladiator brand names primarily to retailers, distributors and builders.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of WHR – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,278,041,616 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.99 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 76.02% Pass
6. Moderate PEmg Ratio PEmg < 20 16.52 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.64 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.99 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -32.61 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $10.43
MG Growth Estimate 13.16%
MG Value $363.20
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $151.25
MG Value based on 0% Growth $88.67
Market Implied Growth Rate 4.01%
Current Price $172.31
% of Intrinsic Value 47.44%

Whirlpool Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.56 in 2012 to an estimated $10.43 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.01% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Whirlpool Corporation revealed the company was trading above its Graham Number of $141.94. The company pays a dividend of $1 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 16.52, which was below the industry average of 27.31, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-86.15.

Whirlpool Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$86.15
Graham Number $141.94
PEmg 16.52
Current Ratio 0.99
PB Ratio 2.64
Current Dividend $1.00
Dividend Yield 0.58%
Number of Consecutive Years of Dividend Growth 0


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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $8,587,000,000
Total Current Liabilities $8,701,000,000
Long-Term Debt $3,718,000,000
Total Assets $20,190,000,000
Intangible Assets $5,649,000,000
Total Liabilities $15,186,000,000
Shares Outstanding (Diluted Average) 76,600,000

Earnings Per Share History

Next Fiscal Year Estimate $13.42
Dec2015 $9.83
Dec2014 $8.17
Dec2013 $10.24
Dec2012 $5.06
Dec2011 $4.99
Dec2010 $7.97
Dec2009 $4.34
Dec2008 $5.50
Dec2007 $8.01
Dec2006 $5.67
Dec2005 $6.19
Dec2004 $5.90
Dec2003 $5.91
Dec2002 -$5.68
Dec2001 $0.31
Dec2000 $5.20
Dec1999 $4.56
Dec1998 $4.25
Dec1997 -$0.20
Dec1996 $2.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $10.43
Dec2015 $8.51
Dec2014 $7.66
Dec2013 $7.11
Dec2012 $5.56
Dec2011 $5.92
Dec2010 $6.36
Dec2009 $5.68
Dec2008 $6.32
Dec2007 $6.60
Dec2006 $5.13
Dec2005 $4.08
Dec2004 $2.79
Dec2003 $1.51
Dec2002 $0.12
Dec2001 $2.96
Dec2000 $3.91

Recommended Reading:

Other ModernGraham posts about the company

Whirlpool Corporation Analysis – 2015 Update $WHR
19 Companies in the Spotlight This Week – 8/9/14
Whirlpool Corporation Annual Valuation – 2014 $WHR
Whirlpool Corp (WHR) Quarterly Valuation – May 2014

Other ModernGraham posts about related companies

Whirlpool Corporation Analysis – 2015 Update $WHR
Whirlpool Corporation Annual Valuation – 2014 $WHR
Whirlpool Corp (WHR) Quarterly Valuation – May 2014


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.






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