Company Description

Lennox is a leading global provider of climate control solutions. The company designs, manufactures and markets a broad range of products for the heating, ventilation, air conditioning (HVAC) and refrigeration markets. The company’s products are sold under brand names that include Lennox, Armstrong Air, Bohn, Larkin, and Heatcraft.

The Zacks Rank #2 stock has a dividend yield of 1.3%.

Fundamentals Are Improving

The company indicated that its end markets continued to show improvement in the fourth quarter of 2009. Its residential HVAC end markets are seeing strong growth. However, its commercial HVAC and refrigeration markets were still down from a year ago, but the rate of decline continued to slow in the fourth quarter.

Additionally, the company’s continued focus on productivity helped to expand profit margins and drive adjusted EPS growth of 12% in the fourth quarter.

Fourth-Quarter Results

On Feb 4, Lennox had fourth-quarter sales of $733 million, flat with the year-ago quarter. The company also reported earnings per share from continuing operations of $0.58, up from $0.52 in the year-ago quarter and $0.10 ahead of the Zacks Consensus Estimate.

Management reiterated its 2010 outlook, which is originally provided on December 16. The company expects revenue growth of 3% to 7% and adjusted EPS from continuing operations of $1.85-$2.25.

Estimates Trending Higher

In the last 30 days, analysts increased their earnings estimates for both 2010 and 2011. The Zacks Consensus Estimate for 2010 has gone from $2.11 to $2.17, while the 2011 Zacks Consensus Estimate has moved from $2.64 to $2.76.

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(LII) Lennox International – Fundamentals Are Improving

Company Description

Whirlpool manufactures home appliances, such as refrigerators, dishwashers, cooking and countertop appliances. The company owns many iconic brands such as Maytag, KitchenAid, Jenn-Air, Amana, Bauknecht and Consul.

Whirlpool has 67 manufacturing and technology research centers worldwide.

Whirlpool Surprised By 26.15% in the Fourth Quarter

If you’ve been reading our Rank Buy profiles on Whirlpool both on the Value and Momentum side of the equation the past month, you were not surprised by Whirlpool’s outstanding earnings report on Feb 2.

Just as the third quarter alluded to the growth potential in the emerging markets, as emerging market sales offset some of the decline in the North American and European markets, so the fourth quarter has now confirmed that Whirlpool’s strategy is on track.

Latin American sales jumped 52% to $1.2 billion. Excluding currency translation, sales rose about 28%.

Brazil has been the hot market due to the expanding middle class and home ownership that is being pushed by several government incentive programs. Whirlpool expects Brazilian appliance shipments to rise 5% to 10% in 2010 compared with 2009.

Asian sales also jumped 34% but Asia is Whirlpool’s smallest segment. Sales were just $188 million for the quarter. Whirlpool is forecasting growth of 3% to 5% in unit shipments for 2010.

But even the North American and European markets, which had been a drag on results, saw sales growth. North American sales were up 4% and Europe rose 2% over the year ago quarter.

Outlook for 2010

Whirlpool is optimistic about 2010. The company issued earnings per share guidance of between $6.50 and $7.00 which is much higher than the current Zacks Consensus Estimate of $6.36 per share.

Look for covering analysts to revise their estimates in the next few days.

Value Fundamentals

Whirlpool continues to exhibit strong value fundamentals. The #1 Rank (strong buy) stock has a forward P/E of just 11.96 and a price-to-book ratio of 1.53. Whirlpool’s 5-year average return on equity (ROE) is also an outstanding 17.18%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
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(WHR) Whirlpool Corporation – Earnings Surprised By 26.15% in the Fourth Quarter

Operating profit in the quarter totaled $199 million compared to $10 million in the prior-year quarter. Net sales totaled $4.9 billion, an improvement of 13% from the previous year. Excluding the impact of foreign exchange translation, the sales increased 5%.

In 2009, earnings were $4.34 per share compared to $5.50 per share in 2008. This nearly touched the Zacks Consensus Estimate of $4.46 per share. Net sales were $17.1 billion, a decrease of 10% from the year-ago level. Excluding the impact of foreign currency translation, sales declined 6% from the prior year.

Regional Performance

Sales in North America rose 4% to $2.6 billion, driven by an 8% increase in unit shipments. Unit shipments in the U.S. industry of major appliances increased 6% during the quarter. The region reported an operating profit of $136 million compared to a loss of $20 million in the previous year. The improvement was attributable to cost reduction, productivity initiatives and increased sales volume, partially offset by lower product price/mix. Whirlpool expects unit shipments in the U.S. industry to increase between 2%–4% in 2010.

Sales in Europe gained 2% to $956 million. Excluding currency effects, the sales declined 9%. Overall industry unit demand during the quarter decreased 8%. The region reported an operating profit of $19 million compared to $2 million in the previous-year period. Results were favorably impacted by lower costs and higher price/mix, partially offset by lower volume. The company expects industry unit shipments for 2010 to be close to the 2009 levels.

Sales in Latin America shot up 52% to $1.2 billion; excluding currency effects, the increase was 28%. The operating profit was $138 million compared to $110 million in the prior year. The improvement in profitability was attributable to higher sales volumes, higher productivity and favorable foreign currency fluctuations, partially offset by lower monetization levels of certain tax credits and lower price/mix. The company anticipates appliance shipments in Brazil to go up 5%–10%.

Sales in Asia advanced 34% to $188 million; excluding currency effects, the increase was 27%. The operating profit increased $3 million to $6 million from the prior year. The increase was attributable to higher unit volume, partially offset by lower price/mix. The company anticipates industry unit shipments in Asia to increase by 3%–5% in 2010.

Financial Position

Whirlpool had cash and cash equivalents of $1.4 billion as of December 31 2009 compared to $146 million as of December 31, 2008. The company generated free cash flow of $1.1 billion in 2009 compared to an outflow of $100 million in 2008. Working capital, particularly due to reduced inventory balances, was a significant source of cash flow during the year. The company expects to generate free cash flow of $400 million–$500 million in the year.

In 2009, Whirlpool had a net cash flow of $1.55 billion from operating activities compared to $327 million in 2008. Meanwhile, capital expenditures totaled $541 million during the same period.

Long-term debt amounted to $2.9 billion as of December 31, 2009. The long-term debt-to-capitalization ratio stood at 44%.

Estimate Revisions Trend

For 2010, Whirlpool expects earnings per share in the range of $6.50–$7.00 per share. This is a tad higher than the Zacks Consensus Estimate of $6.36 per share.

Over the last 30 days, out of the 7 analysts covering the stock, one has revised upward the estimate for full year 2010. Therefore, in the absence of any downward revision of estimate, our long-term recommendation on the stock remains “Outperform.”

With respect to earnings surprises, the stock has performed consistently well over the trailing four quarters, barring the fourth quarter of 2008. The average earnings surprise was as high as 226.49%. This implies that Whirlpool has beaten the Zacks Consensus Estimate by 226.49% over the last four quarters.

The current Zacks Consensus Estimates for the first quarter and full-year 2010 are profits of $1.21 and $6.36, respectively. The upside potential of these estimates, essentially a proxy for future earnings surprises, currently stands at 2.48% and 1.10%, respectively.

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(WHR) Whirlpool Corporation Tops Earnings Estimates

Third-Quarter Results

Although sales were down a marginal 2% from last year to $189 million, earnings came in strong at 80 cents, 8 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last four quarters by an average of 14 cents, or 58%.

The solid results were driven by controlling costs and Helen’s Housewares Segment, where sales were up 22% from last year.

Estimates Jump

Estimates jumped higher on the good quarter, with the current year adding 9 cents and moving to $2.28. The next-year estimate is also up 8 cents, climbing to $2.47, an 8% growth projection.

The Chart

Shares of HELE hit a new 52-week high at $25.88 on the strong quarter, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

Zacks Investment Research

(HELE) Helen of Troy Limited – Earnings Estimates Jump

Company Description

Whirlpool manufactures home appliances, such as refrigerators, dishwashers, cooking and countertop appliances. The company owns many iconic brands such as Maytag, KitchenAid, Jenn-Air, Amana, Bauknecht and Consul.

Whirlpool has 67 manufacturing and technology research centers worldwide.

Zacks Consensus Estimates Move Higher Ahead of Earnings Report

Whirlpool is scheduled to report fourth-quarter results on Feb 8. The fourth quarter Zacks Consensus Estimate is up 12 cents to $1.28 per share in the last month.

For the full year, one estimate was raised in the last week, pushing the 2009 Zacks Consensus to $4.42 from $4.41 per share.

Analysts expect a much better 2010 as earnings growth is projected at 43.06%. The 2010 Zacks Consensus Estimate rose 33 cents to $6.32 per share in the last month.

Whirlpool has a track record of surprising on earnings, having done so 3 out of the last 4 quarters by an average of 226.49%.

Cost Cutting Boosted the Third Quarter

On Oct 23, Whirlpool reported third-quarter results which surprised on estimates by 114.29%. The results were boosted by cost reduction and productivity initiatives which increased operating profit by 8%.

Total sales, however, fell 8% to $4.5 billion. Stripping out foreign exchange translation and sales would have declined 3%.

The Latin American and Asian segments propelled sales for the quarter. Brazilian appliance sales jumped 40% in local currency while Asian sales climbed 18% compared to a year ago. North America and Europe were still weak, however, as both saw sales declines of 9% and 17%, respectively.

Value Fundamentals

Whirlpool is a Zacks #1 Rank (strong buy) stock. It has a price-to-book ratio of 1.65. Whirlpool also pays a dividend, with a current yield of 2.10%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research

(WHR) Whirlpool Corporation – Consensus Estimates Move Higher Ahead of Earnings Report

The company has a diversified product portfolio, which helps it to serve distinct markets across the world. It aims to mitigate the slackening demand by undertaking significant cost reduction actions. These actions, in turn, have helped the company to improve liquidity.

The company’s earnings for the third quarter were much better than the Zacks Consensus Estimate. The results prompt us to upgrade the recommendation on Whirlpool from Neutral to Outperform with a target price of $92.

Zacks Investment Research

(WHR) Whirlpool Corporation – Bull of the Day

Company Description

Whirlpool Corp. develops and manufactures home appliances worldwide. The company was founded in 1906 and has a market cap of $6.05 billion.

The weak consumer environment hasn’t stopped shares of WHR from posting big gains in 2009, fueled by the company’s better than expected Q2 results from early October.

Third-Quarter Results

Sales were off a bit from last year, down 9% to $2.5 billion, but earnings came in much better than expected at $1.65, 88 cents ahead of the Zacks Consensus Estimate. Whirlpool has handily beat in each of the last 3 quarters by more than 100%.

Whirlpool’s solid performance was driven by a strong showing in North America, where operating profit increased to $140 million from $74 million last year on cost reductions and productivity gains. The company also looked strong in Latin America, where sales were flat year over year, but would have been up 12% excluding currency translations.

CEO Talk

It’s clear that Whirlpool has acted quickly to respond to changing market conditions. CEO Jeff Fetig underscored this notion, saying “our improved outlook reflects our success in restructuring our business to aggressively align our capacity and resources to lower demand levels.”

Estimates Rising

The good quarter and optimistic outlook sent Whirlpool estimates higher. The current year added 46 cents and moved to $4.41. The next-year estimate is very bullish, pegged at $6.32, a 43% growth projection.

Valuation

Based on the next-year estimate, which kicks in at the new year, WHR has a forward P/E multiple of 13X, a discount to the overall.

The Chart

Shares of WHR have had a great year, locking into a very nice upward trend after bottoming out in early March with the overall market. A new 52-week high was hit last week just above $85, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

Zacks Investment Research

(WHR) Whirlpool Corporation – Next-Year’s Earnings Estimates Are Very Bullish

Company Description

Helen of Troy develops and manufactures products in two major segments, personal care and house ware. The personal care division is home to well known brands like Revlon and Vidal Sasoon while the house ware group develops items like food containers and BBQ tools. The company was founded in 1968 and has a market cap of $698 million.

Second-Quarter Results

Helen of Troy reported solid second-quarter results on Oct 7 that were better than expected. Revenue was up 5.6% from last year to $162.2 million. Earnings also came in strong at 51 cents per share, 12 cents ahead of the Zacks Consensus Estimate.

Segment Performance

The company’s house wares segment was up 8.9% from last year to $50.6 million while its personal care segment was up 4.9% to $111.6 million.

Estimates Advance

After the good quarter estimates moved higher. The current year added 22 cents and jumped to $2.19. The next-year estimate stands at $2.39, a solid 9% growth projection.

Great Value Too

In spite of the recent gains, this stock still has value, trading with a forward P/E of 10.5, a discount to the overall market.

The Chart

Shares of HELE hit a new 52-week high on the good quarter before recently pulling back a bit. Take a look below.

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(HELE) Helen of Troy Ltd. – Reported Solid Second-Quarter Results

Net sales decreased 8% to $4.5 billion. Excluding the impact of foreign exchange translation, the sales decline was estimated at 3%.

Operating profit increased 8% on a year-over-year basis. It was favorably impacted by cost reduction and productivity initiatives. However, it was partially offset by lower global sales and production volumes, unfavorable foreign currency impact and lower monetization of certain tax credits.

Regional Performance

Sales in North America fell 9% to $2.5 billion. Excluding the currency effects, the decline was 7%. Unit shipments in the U.S. industry of major appliances declined 6% during the quarter. The region reported an operating profit of $140 million compared to $74 million in the previous year. This was attributed to cost reduction and productivity initiatives. Whirlpool expects full-year unit shipments in the region to decline 10% compared to its prior expectation of 10%-12%.

Sales in Europe shrank 17% to $899 million; excluding currency effects, the decline was 11%. Overall industry unit demand during the quarter decreased 10%. The region reported an operating profit of $14 million during the quarter compared to $52 million in the prior-year quarter.

This was attributed to substantially lower volumes and the non-recurrence of an asset sale and insurance settlement recorded in the previous year. The company continues to expect full-year industry unit shipments in the region to decline 13% from the year-ago level.

Sales in Latin America rose marginally to $992 million from $989 million in the prior-year quarter. Excluding currency translation, sales increased 12%. The rise was driven by a strong increase in Brazilian appliance demand. During the quarter, the company’s Brazilian appliance sales increased 40% in local currency.

Operating profit totaled $93 million, compared to $116 million in the year-ago quarter. This can be attributed to significantly lower monetization levels of certain tax credits and unfavorable foreign currency fluctuations. The company currently anticipates full-year Brazilian appliance shipments in the region to increase more than 15% compared to the previous expectation of more than 10%.

Sales in Asia increased 18% to $162 million and excluding the impact of currency, sales increased 26%. Operating profit during the quarter totaled $8 million, an increase of $8 million from the prior year. This was attributed to higher unit volume, higher productivity, cost reductions and a $3 million asset sale gain. The company anticipates full-year industry unit shipments in the region to move up 10% compared to the previous expectation of unit shipments of flat to up 5%.

Financial Position

Whirlpool had cash and cash equivalents of $725 million as of Sept. 30 2009. Long-term debt amounted to $2.5 billion on that date. The long-term debt to capitalization ratio stood at 41%.

In the first nine months of 2009, Whirlpool had a net cash flow from operating activities of $652 million. Meanwhile, capital expenditures totaled $348 million during the same period.

Outlook

For the full year, Whirlpool raised its anticipated earnings per share to $4.25 from the prior expectation of $3.50 to $4.00 per share. The revised figure is higher than the Zacks Consensus Estimate of $4.00 per share. The company also raised its expectation to generate free cash flow of $500-$600 million from the prior expectation of $300-$400 million.

We recommend the shares of Whirlpool as Neutral.

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(WHR) Whirlpool Corporation Profits Plummet 47%

Second quarter sales increased 5.6% percent to $162.2 million from $153.5 million last year. U.S. sales contributed 5.7 percentage points to growth in total sales, which was partially offset by a 0.1 percentage point negative contribution from international sales due to unfavorable foreign currency exchange rates.

The Housewares segment posted 7.3% increase in sales to $50.6 million, while sales in the Personal Care segment increased 4.9% to $111.6 million compared to prior year quarter.

Sales growth in Housewares was driven by continued growth in the dry food storage category and other line extensions. The Housewares division continued to expand its OXO brand in the first half with the completion of two strategic licensing agreements with Staples Inc. (SPLS), the world’s largest office products company, and UCB, a global biopharmaceutical leader. These partnerships extend OXO’s reach into new categories.

The company is focusing on its five core initiatives – maximizing high growth potential branded products (10 key brands represented 83% of FY09 sales volume), accelerating new product pipeline, leveraging innovation, growing through acquisitions and cost controls and productivity improvement.

The company aims to cut down expenses and strengthen operating margins by eliminating unnecessary spending, co-innovating with manufacturers to eliminate costs, leveraging technology, and making productivity drivers a key focus of its business. Through these efforts, HELE managed to cut down its SG&A expenses as a percentage of sales by 310 bps in the second quarter and 350 bps year-to-date.

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(HELE) Helen of Troy Ltd. Outdoes Estimates

For the following year, the Zacks Consensus Estimate of $2.16 climbed last month’s $1.91.

The second-quarter Zacks Consensus Estimate is at 39 cents, a penny above last month’s projection.

Improved Fundamentals

The company’s valuation, a forward P/E of 10.83, has become even more attractive than it was in mid-July, when Helen of Troy Limited was
featured as a Value pick.

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(HELE) Helen of Troy Limited Consensus Estimates Continue to Rise

Volume is well above average at approximately 465,000, compared to 181,000.

HELE is a leading designer, producer and global marketer of brand-name personal care and household consumer products. It is 1 of 3 companies from the cosmetics & tltrs industry on today’s 224-stock Zacks #1 Rank List, which also includes L’Oreal ADR (LRLCY) and Revlon (REV).

A Good Start to the Fiscal Year

Earlier today, HELE announced earnings of 47 cents per share for its fiscal first quarter, which was 34% atop the consensus of 35 cents. In the year-ago quarter, the company announced earnings per share of 42 cents.

Sales declined, but by less than 1% to $143.9 million, compared to $145 million year over year. Sales at the company’s Housewares Segment advanced 11%, while sales at the Personal Care Segment declined 5%.

“The economic environment remains challenging,” said Chairman, CEO and President Gerald J. Rubin. “As a leader in our product categories to our retail partners, we believe we are poised to effectively react to changes in the marketplace as they occur. We stand ready to take advantage of improvements in the future retail environment.”

Estimates Could Pick Up

Earnings estimates on HELE are already higher than levels from 2 months ago, but today’s report could start a new round of upward revisions.

At the moment, a consensus of 3 covering analysts are expecting earnings per share of $1.73 for the fiscal year ending February 2010, which is up 18.5% from 60 days ago.

It’s still very early, but analysts are currently seeing earnings of $1.91 for next fiscal year, ending February 2011, marking a year-over-year advance of more than 10%. The past 2 months has seen a gain of as much as 46% for the period.

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(HELE) Top Performer for Thurs: Helen of Troy- Zacks #1 Rank Top Performers