Shares of Whirlpool have already slipped about 15% over the past month, but trader Mike Murphy insists there’s more downside to come.
His call may seem counter-intuitive if you look at the Whirlpool earnings headlines. The appliance maker beat the Street.
Although net income at Whirlpool fell to $92 million, or $1.17 a share – results beat analysts' average estimate of $1.12 a share, according to Thomson Reuters.
That would seem positive.
However Whirlpool’s relative strength was due to higher prices – and Murphy doesn’t like that.
“They’re increasing prices but not increasing sales,” he says. And Murphy believes ultimately higher prices will send buyers elsewhere. In turn, that should force the company to revise its forecast. “Either they need a big upswing in demand, or their volumes won’t be anywhere near what they’re guiding for,” he says on CNBC's Fast Money Halftime Report.
Also Murphy believes recent price action underscores the Street’s distrust of this stock.
“The stock started to turn south in the morning when the company said on the conference call that they were seeing a lot of inflationary pressure and they weren’t expecting consumer confidence until the end of the year,” Murphy says
And Murphy sees yet another cause for concern. “There was a ruling that allows refrigerators from South Korea and Mexico to come into the US without extra taxes.” That too should be negative for Whirlpool.
All told, “I think there’s more downside,” he says.