Shares of appliance maker Maytag (NYSE:MYG) were off in morning trading today, but investors nevertheless received reason for optimism on Friday morning. A Reuters report said company executives told attendees of a Chicago trade show that first-quarter sales have been strong, and the company projects solid top-line growth for the year. The company is also forecasting strong market-share growth this year, in part because of well-received new products like its Neptune Drying Center.
The market's reaction to the news, however, has been largely muted -- and that's not surprising. What most investors want to hear about at Maytag is the struggling Hoover floor-care business, which blighted an otherwise strong operating performance last year. While the Reuters article did say a new labor contract at Hoover should help costs, it also needs to re-energize sales growth. That won't happen until the second half of 2004, even though several new Hoover products already hit the market.
Hoover management has steadfastly told investors to wait for the latter half of 2004. That may seem like a short time from now, but Hoover hasn't seen sales growth for several years. As we discussed in mid-October, 2003 was troublesome, 2002 was mixed, and 2001 was bad. Although, in 2000, investors may remember with hope, new floor-care products helped energize sales growth for the year.
Taken broadly, Friday's Maytag news can be seen to benefit not only Maytag but also appliance competitors Whirlpool (NYSE:WHR), Electrolux (NASDAQ:ELUX), massive conglomerate General Electric (NYSE:GE), and others. Improved performance at Hoover, meanwhile, should pay big dividends for financially strong Maytag. Its shares have outperformed Electrolux, Whirlpool, and the S&P 500 over the last 12 months.
That's significant news. We couldn't say that as recently as January, indicating that investors are perhaps getting behind the marque that made the Maytag man again.
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Fool contributor Dave Marino-Nachison owns shares of GE.
