Whirlpool (WHR) is one of the stocks that lost the most value in the last year. After falling almost non-stop, the stock's plunge finally came to a halt. The stock price was as high as $86 a share last year and it bottomed out in December at $45. Since December, the stock price has been moving up slowly, and Wednesday its price moved up by 16% to $64. At $45 per share, the stock seemed like it was undervalued, while at $86 per share it was overvalued. Now the stock price is $64, and many investors are thinking about buying in. Is it too late?
My answer based on the following analyses is no. The stock is still undervalued and it still has a lot of room to go up.
First, I will compare the company's capital growth vs. its book value growth. Ten years ago the company's book value was $1.52 billion and its stock price was $75.09. Today, Whirlpool's book value has grown to $4.50 billion whereas its stock price is down to $64.00. In other words, in the last 10 years, the company's book value grew by almost 200% whereas its share price plunged by almost 15%.
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Next, I will look at Whirlpool's revenue growth vs. its capital growth. Ten years ago, the company's revenue was $2.57 billion and today it is $4.63 billion. This means the company increased its revenues by about 80% in the last decade. The stock price definitely lags far behind the company's revenue growth.
Ten years ago, the company had holdings of cash and equivalents of $138 million. Today, this number has grown to $511 million, even though it's been declining since last year. Even with the recent decline, the company's cash and equivalent holdings increased by 270% in the last 10 years.
The next metric I will look at is the company's EPS growth. Ten years ago, the company had -$7.65 EPS, which indicates a large loss. When the company was profitable in June 2002, its EPS was 92 cents. Now the company's EPS sits at $2.27. The company's EPS growth in the last decade definitely outperformed its market value growth.
Furthermore, I will provide a chart of the company's long term debt over the last decade as a cautionary note. The company's debt has been fluctuating up and down over the last 10 years and it's currently near all time highs. On a positive note, it's been declining since 2009.
Conclusion: Whirlpool still has plenty of upside potential as the company's market value never caught up to its real growth. I rate Whirlpool a buy.