Tariff Changes And New Products Will Secure US Manufacturing Edge

Key Takeaways

• Newly announced tariffs and trade policy changes are set to boost Whirlpool's revenue, net margins, and competitive edge against Asian rivals.
  
• Innovative product launches and direct-to-consumer strategies are expected to drive organic growth, enhancing revenue, EBIT margins, and market share.
  
• Economic uncertainties, currency depreciation, and competition from Asian firms and trade policy changes threaten Whirlpool's market share, revenue growth, and profitability.

Catalysts

Manufactures and markets home appliances and related products and services in the North America, Latin America, Asia, and internationally.

• Whirlpool is expected to benefit from newly announced tariffs, which will level the playing field with Asian competitors by removing cost disadvantages. This should enhance future revenue from domestic sales and improve overall net margins.
  
• The launch of a significant new product line, including highly anticipated innovations, is anticipated to drive organic growth significantly in the latter half of 2025, positively impacting revenue and EBIT margins.
  
• The company's commitment to price actions and cost takeout strategies, including manufacturing and supply chain efficiencies, will continue to support margin expansion and earnings growth.
  
• Whirlpool's sizable U.S. manufacturing footprint, which outpaces competitors, is expected to capitalize on domestic production advantages following trade policy changes, providing a competitive edge in market share and positively impacting revenue and earnings.
  
• The continued focus on innovative direct-to-consumer sales channels in the SDA segment is expected to drive significant revenue growth and maintain strong EBIT margins, demonstrating the segment's potential for sustainable profit expansion.

Whirlpool Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Whirlpool's revenue will grow by 2.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.0% today to 4.5% in 3 years time.
• Analysts expect earnings to reach $752.0 million (and earnings per share of $12.54) by about April 2028, up from $7.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $842 million in earnings, and the most bearish expecting $596 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.6x on those 2028 earnings, down from 608.4x today. This future PE is greater than the current PE for the US Consumer Durables industry at 8.9x.
• Analysts expect the number of shares outstanding to grow by 1.78% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.41%, as per the Simply Wall St company report.

Whirlpool Future Earnings Per Share Growth

Risks

• Economic uncertainty and declining consumer confidence in the U.S. have led to a challenging macro environment, potentially impacting Whirlpool's net sales and revenue growth.
  
• The ongoing issue of Asian competitors preloading inventories into the U.S. market could continue disrupting the competitive landscape, affecting Whirlpool's market share and revenues.
  
• Tariff changes and trade policy fluctuations create uncertainty that could affect cost structures and net margins if mitigation strategies do not sufficiently offset these headwinds.
  
• The depreciation of key foreign currencies, such as the Brazilian real, has negatively impacted net margins and could continue to affect Whirlpool's international earnings.
  
• Potential changes in trade policies could alter the competitive dynamics and cost advantages, particularly if tariffs imposed on competitors are reduced, which may affect Whirlpool's cost advantages and profitability.

Valuation

• The analysts have a consensus price target of $99.431 for Whirlpool based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $143.45, and the most bearish reporting a price target of just $65.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $16.8 billion, earnings will come to $752.0 million, and it would be trading on a PE ratio of 10.6x, assuming you use a discount rate of 11.4%.
  
• Given the current share price of $76.58, the analyst price target of $99.43 is 23.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.