AB Electrolux (publ), together with its subsidiaries, manufactures and sells household appliances. It operates through four segments: Europe; North America; Latin America; and Asia/Pacific, Middle East, and Africa. The company offers various appliances, such as refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners, microwave ovens, floor-care products, vacuum cleaners, water heaters, heat pumps, and other small domestic appliances, as well as consumables and accessories. It also provides hobs, ovens, and hoods; and tumble dryers. The company offers its products under the Electrolux, AEG, and Frigidaire brands through retailers, buying groups, independent stores, and professional users. AB Electrolux (publ) was founded in 1901 and is headquartered in Stockholm, Sweden
Electrolux is the world's second largest manufacturer of household appliances after Whirlpool. Both stocks has taken a severe beating in the aftermath of the Coronavirus, with the share-price of Electrolux currently being more depressed than Whirlpool's.
According to DCF-models, both stocks are currently undervalued, with Electrolux coming in at roughly 50% and Whirlpool at 30%.
(Detailed calculations for the DCF-models of Whirlpool and Electrolux can be viewed in the file below*)
With the severe demand slump seen by the Coronavirus, and the gradual lifts in quarantine restrictions, demand for household appliances is set to pick up post-Corona. Current analyst-estimates place a reduction in revenue for 2020, with increases for 2021.
Revenue estimates Electrolux
Recent Insider transactions underpin faith of management in the company, as large volumes of shares were bought during the peak of the Corona-virus meltdown between February and March.
We believe that Electrolux share price is set to rise over the next 4-6 months, and that it is relatively undervalued compared to Whirlpool, as seen by the relatively higher appreciation of Whirlpool's share price in comparison with Electrolux. Therefore, Electrolux has much more upside left, and we at East Invest believe that the magnitude of the movie will be relatively swift as economies over the world gradually lift restrictions.
A price-target of 240 SEK is therefore reasonable, and recommend a BUY.