Somebody must have forgot to tell Whirlpool (NYSE:WHR) about the slowdown in consumer spending, because the company has beaten earnings expectations for the last five quarters in a row.

That's right, five quarters in a row despite all the doom and gloom surrounding the U.S. credit crunch. Whirlpool has simply continued to rake in the profits in 2007. With the last earnings announcement for the fourth quarter of 2007 coming in 10.7% higher than estimates, it seems Whirlpool has figured out how to guard against the bear and continue to shoot for the bull.

Maytag Acquisition Drives Earnings
It's hard to argue with any of Whirlpool's numbers. In the fourth quarter of 2007, its operating profit jumped 74% to $332 million when compared to the same quarter in 2006. Full-year earnings in 2007 were $8.10 per share, a 28% increase from the $6.35 per share earned in 2006.

A significant catalyst in the amazing profit and earnings spike in 2007 was the successful acquisition of Maytag, which Whirlpool bought in 2006. This profit growth is especially impressive given the increased oil prices, inflated materials prices and a stagnant U.S. housing market.

International Success
Whirlpool Europe, Latin America and Asia all reported astounding fourth quarter and full year revenues in 2007. Whirlpool Europe saw a 22% increase in operating profit; Latin America saw a 73% increase in operating profit, and Whirlpool Asia's fourth quarters sales spiked 26% from the same quarter last year.

The company anticipated that the housing market was on the downturn and decided to focus efforts overseas during the last couple of years. When Whirlpool realized the American housing market had reached its pinnacle, it bought one of its largest competitors, Maytag, and combined forces to make a significant stab at the foreign markets. In hindsight, the move appears to be one of exceptional timing. (If overseas investing isn't a possibility for your own portfolio, check out Offset Risk Without Investing Abroad.)

Giving Back to Shareholders
In the fourth quarter 2007, Whirlpool repurchased $117 million shares of common stock, increasing its yearly total to $368 million. These shares worked heavily toward completing the $500 million repurchase plan established in 2006, as Whirlpool now only needs to buy another $97 million of common stock to complete the project. The company also produced $521 million in free cash flow in 2007, which it used to reduce total outstanding debt to $2.1 billion from $2.3 billion. The company also announced a quarterly dividend of 43 cents per share, which comes to a yield of almost 2%.

It's clear that Whirlpool is making solid money. With the $500 million share repurchase program almost complete, the reduction in corporate debt and a solid dividend payout, Whirlpool is on the growth fast track and is steadily sweetening shareholder positions. This will continue to attract new investors and ultimately raise the share price. (To learn what repurchase plans can mean to both companies and shareholders, see A Breakdown Of Stock Buybacks.)

The Bottom Line
With earnings on the rise, revenues from foreign operations spiking and the share repurchase program approaching completion, Whirlpool's shares are going nowhere but up. With a trailing P/E ratio of 11, Whirlpool is significantly undervalued compared to its industry average of 15 and the S&P 500's trailing P/E ratio of 20. If this stock is expected to trade at the industry average P/E, a fair valuation is more along the lines of $120 per share. So, on that basis we're looking at a current share discount of $30 - a true diamond in the rough.

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