Due to rough economic environments in late 2010, Whirlpool (WHR) couldn't do much to escape its $40 decline. It attempted to increase margins, which allowed them to outperform Q3 predicted results, but the problem lie in the results themselves. Since the bottom in September, WHR has managed to climb back to around $90 a share. The mood surrounding WHR is now overwhelmingly positive leading to unusual volume on Feb11 calls at $105. This may be a speculation play, but it is backed by a strong valuation story and the technical's are there to support as well.
DCF prices it out in a range between $100 and $110, but others have it priced out higher relative to its industry, which it has managed to outperform in sales and income growth YTD. This could prove to be a positive tide that lifts its share price slightly above valuation. As far as free cash flow, WHR has been able to amass an FCF that it hasnt seen in at least the past 5 years. FCF took a hit as of late but in the Q3 earnings call executives attributed the dip to overstocked inventories caused by its new product launches and lack of demand for product. However, global expansion to emerging markets has been emphasized as well which seems like a perfect place to unload an overstocked inventory in 2011.
The technical story shows that there may be a cooling off period that brings it back down to the $88-$89 range, but MFI and RSI readings show that there may be some divergence developing that could drive WHR back into its upward trend towards valuation levels in the $100's.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.