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Whirlpool (WHR -12%) is under pressure today after reporting its Q2 results last night. Simply put, the appliance market remains in a tough operating environment, with elevated interest rates and evolving trade policies continuing to weigh on consumer sentiment. As such, Q2 was expected to be a challenging quarter, and it was as WHR reported its first and largest EPS miss in 10 quarters.

Compounding the disappointing results, WHR announced a likely dividend cut, issued a substantial downward revision to its FY25 EPS guidance, and pointed to persistent near-term headwinds.

• For the overall appliance market, WHR noted that consumer sentiment not only suppressed demand, but consumers are also opting for lower end appliances. Furthermore, Asian competitors continue to ramp up imports ahead of tariffs.
• We think a big thing weighing on the stock is not just the Q2 results but WHR expecting weakness to persist well into Q3. Investors had been hoping for a recovery in 2H25, however these comments certainly put that in doubt.
• WHR also provided some insight into its outlook on the U.S. housing market, a key driver of appliance demand. While the industry is experiencing multi-decade lows in existing home sales, WHR continues to see strong underlying fundamentals that point to a likely multi-year recovery. Management feels there is no company better positioned to benefit from an eventual recovery, which is also the case for when the full effects of tariffs kick in.
• Despite WHR's struggles, one of the best things about the stock has been its substantial dividend with a yield above 7%. We think WHR's decision to cut the dividend is taking investors by surprise because they defended the dividend as recently as the Q1 call in April. That clearly seems to be weighing on the stock today, however it still sports a respectable 4.1% yield.
• WHR sharply lowered its FY25 EPS guidance to $6-8 from $10. This marks the second consecutive quarter WHR has issued downside guidance, and this time it was a significant reduction.

We think investors were expecting a challenging Q2 heading into this report. However, we think they were not expecting a huge dividend cut and another substantial guidance cut, given that WHR cut guidance just last quarter. Management was bullish on the dividend as recently as April, so this caught investors by surprise.

The dividend yield was getting pretty frothy above 7%, so it makes sense to cut it as WHR looks to free up cash. Even after the proposed reduction, the new yield still stands around 4% which is still quite robust. Today's selloff may attract value investors to the name who might be willing to wait for a turnaround in the housing market. And still collect a healthy 4% yield while they wait.