Mohawk Industries Shows Strong Stock Performance Despite Market Headwinds
Resilient Earnings and Future Predictions Underpin Analyst Ratings
Calhoun, Georgia-based Mohawk Industries, Inc. (MHK) designs, manufactures, sources, distributes, and markets flooring products for both residential and commercial markets. With a market cap of $8.8 billion, its operations are extensive, covering the Americas, Europe, and the Indo-Pacific region.
Over the past year, Mohawk Industries has significantly outperformed the broader market. MHK stock has surged 40.1% year-to-date (YTD) and an impressive 72.6% over the last 52 weeks, surpassing the S&P 500 Index’s 25.5% gains in 2024 and a 31.3% increase over the past year.
When compared to the Invesco Building & Construction ETF (PKB), which jumped 40% YTD and 59.6% for the year, Mohawk continues to show strong performance.
However, the company is navigating difficult waters. Factors such as high inflation and a sluggish residential and commercial market have contributed to declining sales figures. After releasing its third-quarter earnings on October 24, MHK’s stock took a hit, falling 13.8%. The company reported a 1.7% year-over-year decrease in net sales, bringing it to $2.7 billion. With expectations of tough market conditions continuing into the next quarter, the company’s Q4 adjusted EPS guidance of $1.77 to $1.87 raised concerns among investors.
Despite these challenges, Mohawk Industries has worked diligently to enhance its efficiency and profitability. The company achieved an adjusted operating margin expansion of 40 basis points in Q3, resulting in a 3.3% year-over-year increase in adjusted operating income, which totaled $240.3 million. Moreover, its adjusted EPS grew by 6.6%, reaching $2.90, exceeding the analysts’ consensus estimates.
As we look toward the end of the fiscal year in December, analysts predict that MHK will report a 4.7% year-over-year increase in adjusted EPS to $9.62. Interestingly, the company has demonstrated a strong earnings surprise history, outperforming analysts’ estimates in each of the last four quarters.
The consensus rating for MHK stock is currently a “Moderate Buy.” Of the 14 analysts assessing the stock, six have issued a “Strong Buy” recommendation, while eight suggest a “Hold” rating.
In an interesting turn, this outlook is slightly more optimistic than two months ago when only five analysts favored a “Strong Buy,” and one issued a “Strong Sell.”
On October 28, RBC Capital analyst Michael Dahl adjusted his rating to “Sector Perform” and lowered the price target to $134.
The consensus mean price target for MHK stands at $159.31, indicating a 9.8% upside from current levels. The highest target from analysts reaches $185, suggesting a possible upside of 27.6% from the current price.
On the date of publication, Aditya Sarawgi did not hold any positions, either directly or indirectly, in any of the securities mentioned in this article. Information and data in this article are solely for informational purposes. For more details, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein reflect those of the author and do not necessarily represent the views of Nasdaq, Inc.
