Whirlpool Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of appliance maker Whirlpool (NYSE: WHR  ) jumped 18% on Wednesday after its full-year guidance easily topped Wall Street expectations.

So what: While Whirlpool posted relatively weak fourth-quarter sales, a forecast of "significantly improved" earnings in 2012 is triggering fresh hopes of a real turnaround. Whirlpool shares have been battered over the past few years on weak global demand and spiking costs, but management's initiative to raise prices and dramatically cut costs seems to be finally showing results.

Now what: In 2012, Whirlpool now expects adjusted EPS of $6.50-$7.00, which is well ahead of Wall Street estimates of about $5.85. "We exit 2011 with improving product price/mix, significantly lower inventory levels and strong new product innovation," said Whirpool CEO Jeff Fetig. "These initiatives are the key drivers to improving our operating margins throughout 2012." Given the stock's 30%-plus run-up over just the past two months, however, Mr. Market might now be baking too much optimism into the price.

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