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Inside Wall Street
MAYTAG: WILL A SUITOR CLEAN UP?
This is hardly the time for Maytag's stock to be on the rise. The maker of such big-ticket items as clothes washers, dryers, and kitchen appliances, including the Magic Chef and Admiral lines, has been hit hard by recession and the housing slump. Plus, the gulf war has done little to lift consumer spending. Even so, Maytag's share price has climbed some 40%, to 14, since the beginning of the year.
Why? One rumor is that a British group has been snapping up shares. A New York money manager says the stock's trading pattern "has the look of some aggressive accumulation by big investors." Tony Chmiel, president of AIQ Systems, which runs a computer-based system that tracks stocks, says the price momentum and sharp volume upturn could push Maytag above its resistance level of 14.
In 1990, earnings slipped to 94~ a share from $1.27 in 1989. Salomon Brothers analyst Russ Leavitt sees even lower earnings--80~ a share for this year. In spite of the earnings slump, one takeover investor figures that based on assets, Maytag is worth $20 a share. He says the weak sales and earnings make it more vulnerable to a takeover. In February, Maytag cut its quarterly dividend to 12 1/2~ a share from 22 1/2~. Its debt burden rose in 1989, when it acquired Chicago Pacific, the maker of Hoover appliances. A Maytag spokesman declined comment.Gene G. Marcial