Consumer Credit Research: Whirlpool 2Q26: A Heavy Load for the Back Half

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August 5, 2026 03:27 PM GMT

Consumer Credit Research | North America

Morgan Stanley & Co. LLC

Jenna L Giannelli

Credit Analyst

Whirlpool 2Q26: A Heavy Load

for the Back Half

Roopi Bhangu

Credit Analyst

Exhibit 1 : Fundamental & Valuation View

Better quarter for WHR than the headline miss suggests as

margins improved sequentially, while revenue, EBIT margin, and

FCF guidance were maintained. We think management’s

confidence reflects visibility from pricing, cost actions, and

potential asset sales, and that the equity rally was justified given

an oversold structure that had priced in a sizable guidance cut.

The equity rose ~14%, while belly bonds were +5–6 points as of

market close.

Credit

WHR

Fundamental View Valuation View

Neutral

Cheap

Action / Trade

Buy Secured '34s

Source: Morgan Stanley Research

Key Takeaways

We think management’s confidence indicates visibility for the quarters to come,

supported by the efficiency levers they are pulling (pricing, cost savings) and

other tools at their disposal (i.e. asset sales).

The focus on the balance sheet, the goal of reducing net debt below $5bn by

year-end, and the clearer maturity runway are all positives, in our view.

While we expect results to come in toward the lower end of FY26 guidance,

pricing, cost savings, normalization in industry promotional activity, and easier

comparisons versus 4Q25 provide some support for 2H improvement.

We think the move higher in the bonds was justified, given an oversold capital

structure that reflected concerns about a significant guidance cut and limited

confidence in 2H improvement.

Following today’s move, we prefer to move higher in the capital structure, and

now recommend buying the 2034 secureds, which we prefer over the 2031s. We

also move the back-end bonds to a neutral view, removing our recommendation

to buy, reflecting their underperformance, the marginal improvement in the

outlook, and support from low dollar prices.

Our take on the quarter (+): We view Whirlpool’s 2Q results as constructive

despite a soft headline print. Sales fell 6.8% YoY to $3.52bn (vs. $3.55bn cons.),

gross margin was 12.6% (vs. 15.0% cons.), and adj. EBIT was $62mn (vs. $84mn

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