Whirlpool Shows Light at the End of the Tunnel

What Happened?
Appliance maker Whirlpool (WHR) met reduced expectations Wednesday with third-quarter earnings of $0.98 per share, 37% below its year-ago figure of $1.40. The company announced several weeks ago that third-quarter results would be hurt by a number of factors, primarily increased pricing pressure and retailer Circuit City's  decision to exit the appliance business. Whirlpool CEO David Whitwam said the company's earnings should rebound in the fourth quarter to between $1.45 and $1.55 per share.

What It Means for Investors
The factors dragging Whirlpool down are temporary, and we think it's still a solid stock for investors willing to stick out some short-term underperformance. Whirlpool said Wednesday that it had already started to make up the lost Circuit City sales through other distribution channels, echoing the comments of rival Maytag  in its own earnings announcement last week. Whirlpool also said that new product introductions and productivity gains would help earnings rebound in the fourth quarter to around $1.50 per share, about in line with last year's fourth quarter.

Whirlpool is extremely cheap right now, trading at 6 times trailing earnings after falling more than 50% from its high. While its short-term fortunes are far from guaranteed, we think that it's not a bad stock to own if your time horizon is longer than a few quarters.