Last update on 2024-06-06

Whirlpool (WHR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Comprehensive Piotroski F-Score analysis of Whirlpool (WHR) for 2023, scoring 8/9 on criteria like profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

We're running Whirlpool (WHR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a tool giving insights into a company's financial health, scoring between 0 to 9. A high score suggests a strong, undervalued stock. Whirlpool (WHR) secured a commendable score of 8, showing robust financial standings across different parameters.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 8, Whirlpool appears to be a strong candidate for investment. Its positive net income, cash flow, ROA, and operational efficiency are clear markers of financial health. However, potential investors should note its decreasing current ratio, signifying weaker short-term liquidity. Overall, Whirlpool looks like a potentially valuable stock to consider for further research and possible investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Whirlpool (WHR)

Company has a positive net income?

Netincome of a company refers to the total profit or loss after all expenses have been deducted from total revenue. A positive net income indicates profitability.

Whirlpool's net income for 2023 stands at $481 million, a positive figure. This implies that the company has returned to profitability after experiencing a substantial loss of $1.519 billion in 2022. Over the last two decades, Whirlpool has had mostly positive net incomes, with some fluctuations. Such profitability reaffirms the company's ability to manage its operations efficiently and generate profit, reflecting a solid financial health for 2023. Adding 1 point for this criterion in Piotroski analysis is justified.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects the amount of cash a company generates from its regular operating activities. It is crucial as it indicates the liquidity and efficiency of the business's core activities.

For the fiscal year 2023, Whirlpool (WHR) shows a Cash Flow from Operations (CFO) of $915,000,000, which is positive. This suggests that Whirlpool continues to generate cash from its core operations, which is a good indicator of the company's liquidity. Over the past 20 years, Whirlpool's operating cash flow has generally been positive, with a few exceptional years (like 2008 with $327,000,000). The positivity of 2023's CFO adds 1 point to Whirlpool's Piotroski score, reflecting positively on the company's operational efficiency and cash generation potential.

Return on Assets (ROA) are growing?

The criterion examines if the Return on Assets (ROA) has increased compared to the previous year. A higher ROA signifies improved efficiency in using assets to generate profits, which is crucial for assessing management's effectiveness.

For Whirlpool (WHR), the ROA increased from -0.0812 in 2022 to 0.0279 in 2023. This positive shift marks a substantial improvement in asset efficiency. Adding 1 point indicates a favorable trend. Despite this improvement, it's essential to note that the 2023 ROA is still below the industry median of 0.3496, suggesting further room for enhancement. Compared to historical data, this upward shift is a positive signal following a negative ROA trend.

Operating Cashflow are higher than Netincome?

Operating cash flow (OCF) being higher than net income signifies strong earnings quality, indicating that a company's profits are backed by actual cash generated from its core operations rather than accounting adjustments.

For Whirlpool (WHR), the operating cash flow for 2023 stands at $915 million, while net income is $481 million. Clearly, the operating cash flow exceeds the net income, earning a point in the Piotroski analysis. This trend suggests that Whirlpool's earnings are supported by substantial cash flow generation, indicative of strong operational efficiency. Looking at historical data, Whirlpool has consistently maintained a positive difference between OCF and net income, apart from turbulent periods like 2018 and 2015, when net income dipped into negative territories.

Liquidity of Whirlpool (WHR)

Leverage is declining?

Change in leverage examines whether a company has improved its debt position by reducing its leverage. Lower leverage is generally positive.

The Leverage for Whirlpool has decreased from 0.4641 in 2022 to 0.4058 in 2023, indicating an improvement in the company's debt position. This decline is positive under the Piotroski Analysis and earns Whirlpool a point for this criterion. Over the last 20 years, Whirlpool's leverage has fluctuated, but the recent decrease from 2022 to 2023 represents a stabilizing trend, likely signaling stronger financial health and reduced risk.

Current Ratio is growing?

The Current Ratio is an important liquidity metric, calculated by dividing current assets by current liabilities. It measures a company's ability to pay off short-term obligations with its current assets.

For Whirlpool (WHR), the Current Ratio decreased from 1.0781 in 2022 to 0.8934 in 2023. This denotes a trend where the company's short-term liquidity has deteriorated. Typically, a Current Ratio below 1 signifies that a company's current liabilities exceed its current assets, which could be concerning for creditors and investors. Considering historical data, Whirlpool's Current Ratio has largely remained below the industry median, often drifting below the 1.0 mark in recent years. Compared to an industry median of 1.7959 in 2023, Whirlpool's lower ratio highlights its relative weakness in short-term liquidity within the industry. Given that the Current Ratio has decreased in 2023, the scoring for this criterion is 0 points.

Number of shares not diluted?

Evaluating the trend in outstanding shares is essential. Significantly increasing shares might indicate dilution, while decreasing shares often indicate buybacks, which can signal management's confidence in the company.

In 2023, Whirlpool's outstanding shares stood at 55 million, slightly down from 55.9 million in 2022. This 1.61% decrease depicts a share buyback, which typically augurs well as it can signal management's confidence. Given the long-term data showcasing outstanding shares reducing from as high as 80.8 million in 2013 to current levels, this trend fosters positive sentiment. Hence, this criterion scores 1 point.

Operating of Whirlpool (WHR)

Cross Margin is growing?

Gross Margin is a measure of a firm's financial health and operational efficiency, reflecting the percentage of revenue that exceeds the cost of goods sold.

Whirlpool's Gross Margin rose from 0.1558 in 2022 to 0.1629 in 2023, a positive shift. Over the last 20 years, this metric has fluctuated but recently dipped below the industry median (2023: 0.3496). Historically peaking at 0.2274 (2003) compared to the industry's 0.2739. The most recent increase, though moderate, indicates a potential improvement in operational efficiency despite industry pressure. In comparison, the industry typically outperforms Whirlpool, suggesting a need for strategic adjustments in cost management. The point for increased Gross Margin is earned, reflecting a marginal but positive trend.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. A higher ratio indicates better performance and improved effectiveness in asset utilization.

The Asset Turnover ratio for Whirlpool (WHR) increased from 1.0545 in 2022 to 1.1299 in 2023, indicating an improvement. Given the upward trend, this criterion receives 1 point. Historically, however, the Asset Turnover has seen better days, with peaks as high as 1.7429 in 2005. Still, the latest increase is a positive signal of operational efficiency.