When a stock is as unloved as Whirlpool (NYSE: WHR), a mere reiteration of full-year expectations in an earnings report can cause the stock to soar. That happened after the company released its third-quarter earnings after the close of trading on Wednesday evening. By 11 a.m. ET today, the stock was up 13%.

It's not that bad

Given the deterioration in the housing market and Whirlpool's trading environment through 2024, it was reasonable for investors to fear the worst going into the third-quarter earnings report. Still, the results were good enough, and management maintained its expectations for ongoing earnings before an interest and taxation (EBIT) margin of 6%, ongoing earnings per share of $12, and free cash flow (FCF) of $500 million.

Hitting these numbers would put the stock at 9.3 times earnings and 12.3 times FCF, based on the current price. Those are good valuations for a company with sales that should improve when lower interest rates start stimulating the housing market and, in turn, demand for domestic appliances.

Will Whirlpool hit its guidance?

The company's largest earnings generator (and the swing factor in its earnings) is its major domestic appliance (MDA) North America (North America) segment, and there was good news for investors there. On the second-quarter earnings call, CFO Jim Peters promised "greater than 100 basis points of sequential margin expansion" in each quarter of the second half, and the company plans to exit 2024 with an EBIT margin of about 9%.

Management delivered (just), with MDA NA EBIT margin up 7.3% from 6.3% in the second quarter. Whirlpool will need another 170 basis points to reach 9%, but price increases, ongoing cost cuts, and a possible improvement in higher-margin discretionary MDA purchases might get it there. If so, the stock can appreciate from here, given its low valuation.

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