After a massive rally off the 2009 lows that resulted in meaningful relative outperformance vs. the broader stock market, consumer discretionary stocks — such as home appliances company Whirlpool (WHR) — as a whole have taken a breather in recent months. However, the sector looks to have one more push left in the current cyclical bull market.
The Q1 Whirlpool earnings report came out before the start of last Friday’s trading. Whirlpool came in with adjusted earnings of $2.20 per share of WHR stock vs. the estimated $2.33, thus missing by 13 cents. Revenues came in at a better-than-expected $4.4 billion vs. estimates of $4.3 billion. On a year-over-year basis, EPS were higher by 12% and revenues were up 4%. WHR also managed to improve its cost structure, sending operating profits higher by more than 10% to $281 million.
Lastly, in terms of outlook, WHR reaffirmed full-year earnings guidance of $11.05 to $11.55 per share.
Investors seemed to like the news and after an initially negative reaction, Whirlpool stock managed to close the day higher on Friday by 0.5%.
Whirlpool Stock Charts
From the multiyear view, Whirlpool stock is still going strong on the back of its long-term horizontal resistance break in early 2013. Although WHR is subject to the occasional volatile dip because of its sensitivity to the housing market and general cyclical winds, on the whole it is still well-positioned for another push higher that could possibly bring about fresh all-time highs in coming weeks.
On the daily chart, note how Whirlpool stock took a nasty tumble in the early going this year when it plummeted more than 20% in a matter of just three weeks. As a result, WHR also violated its 200-day simple moving average (red line) for the first time since June 2012, and that was enough to get plenty of investors in the stock to freak out and jump ship.
Once the weak hands got shaken out of Whirlpool stock however, it quickly reversed, traversing back above its 50-, 100- and 200-day SMAs. And after last Friday’s bullish post-earnings move, WHR once again well-positioned to attach its all-time highs.
From a momentum perspective, it is impressive how WHR stock managed to bounce back off its early February lows, which is another reason why I like the stock from the long side right here.
Last Friday’s bullish outside day pushed Whirlpool stock right to the top end of its latest multi-week consolidation range, which now looks to be coiling WHR shares up for a push to new highs sooner rather than later.
From here, I see WHR reaching the high $160s in coming weeks/months, but any push back below last Friday’s lows near $149 would be a bearish sign.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
