Good Monday to all. It is week two of the earnings season, and we are looking forward to more and more and more earnings. 
Last week, we had some more ups and downs as we got into the earnings season. We are looking to make up for some misses this week. On Friday, we positioned ourselves in a brand new longterm position with Paychex Inc. (PAYX). We have a fair value estimate in the mid-40s, while the stock is trading at around $26.
Let’s get into today’s Overnight Trade.
Overnight Trade of the Day: Whirlpool Inc. (WHR)
Analysis: Appliance giant Whirlpool Inc. (WHR) will be reporting their earnings tomorrow morning. The company is expected to report earnings at 2.13 per share. This would be an over 100% improvement from one year ago. That type of year-over-year improvement was the first thing that attracted me to Whirlpool. At the same time, however, the company could definitely beat those estimates. For much of 2008 and 2009, consumers have avoided big items, such as washers, dryers, and dishwashers. Yet, 2010 has shown a return to these items. Whirlpool has shown gains in earnings for four straight quarters, and if the company wants to make it five, then the company will have to beat earnings estimates.
This latest quarter should be a good one for Whirlpool as sales of appliances rose 16% in the month of May. One reason for the gains is the slow recovery of most economic sectors, but another is that the US government has been giving rebates to consumers buying energy efficient appliances. It is a great way to get a discount for life from less energy costs along with less energy and a rebate. In fact, the latest appliance company to report was Electrolux from Sweden. The company makes the
Frigidaire line among others. They saw 10% growth in sales year-over-year in the USA. A foreign company will probably be slightly less than Whirlpool, and WHR does most of their business here in America versus overseas.
From January to May, appliance sales grew 12%. The Q1 EPS for WHR was 2.13. The increase in sales seen in April and May that most likely cooled off slightly in June should help to propel WHR above that 2.13 rate. Additionally, just because home sales have not seen a huge increase so far in 2010 that does not mean home owners are not making improvements. In fact, like…
