Whirlpool: Weak Housing Market And High Energy Prices Justify A Rating Downgrade

Bela Lakos1.53K FollowersFollow5ShareSavePlay(8min)CommentsSummaryWhirlpool is downgraded from buy to hold due to deteriorating macroeconomic conditions and rising energy costs impacting both demand and expenses.Despite a 6.6% dividend yield, declining sales, deleveraging, and potential dividend cuts limit near-term upside and question dividend sustainability.A conservative dividend discount model, assuming a 20% lower dividend per share next year and 2% perpetual growth afterward, yields a fair value of $56 per share.I will await fundamental and macro improvement before considering WHR shares again, as persistent weakness could render WHR a value trap. Bet_Noire/iStock via Getty Images Over the past two years I published several articles on Whirlpool (WHR), always assigning it a buy rating due to the attractive valuation of the firm based on various dividend discount models. Although each timeThis article was written byBela Lakos1.53K FollowersFollowPetroleum engineer with an enthusiasm for investing, accounting and personal finances.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Past performance is not an indicator of future performance. This post is illustrative and educational and is not a specific offer of products or services or financial advice. Information in this article is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.