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Mohawk Industries (MHK) Up 18.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Mohawk Industries (MHK - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mohawk Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Mohawk Industries, Inc. reported solid fourth-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Mohawk reported adjusted earnings of $3.54 per share, beating the consensus mark of $2.88 by 22.9%. The metric also improved 57.3% year over year.
Net sales of $2.64 billion surpassed the consensus estimate of $2.5 billion by 5.6% and grew 9% from the year-ago figure. On a constant-currency and days basis, net sales were up 5.5% year over year. Markedly, the quarterly sales figure is the highest in the company’s history. Although commercial activity remained weak, thereby impacting sales and margins, all markets served by Mohawk witnessed solid residential purchases, with laminate, LVT and sheet vinyl outperforming other flooring categories.
Operating Highlights
Adjusted gross profit of $760.9 million grew 13.9% year over year. Adjusted selling, general and administrative expenses decreased 1.6% from the prior-year level. Adjusted operating income totaled $305.1 million, which improved 49% year over year.
Segment Details
Global Ceramic: Sales in the segment totaled $919.7 million, up 7% year over year. Also, the metric improved 6% on a constant currency and days basis. Adjusted operating income increased to $87.8 million from $53.3 million a year ago owing to improved productivity, higher volume and lower shutdown cost, partially offset by unfavorable price and mix.
Flooring North America: Net sales at the segment came in at $963.7 million, up 3% year over year. The metric was flat on a constant days basis. Moreover, the segment registered adjusted operating income of $91.1 million for the quarter, up 27% from a year ago. Improvement in productivity, increased volume, and reduction in inflation were offset by unfavorable price and mix.
Flooring Rest of the World: Net sales in the segment increased 20% year over year to $758.7 million. On a constant-currency basis, sales were up 13% from the year-ago level. Adjusted operating income was $138 million, up 56.7% from a year ago. The upside was attributed to strengthening volume and productivity, as well as favorable material costs.
2020 Highlights
Adjusted earnings came in at $8.83 per share, up 12.1% from $10.04 a year ago. Net sales were $9.6 billion, down 4.2% from a year ago. Sales were down 3.9% on a constant currency and days basis.
Financial Highlights
As of Dec 31, 2020, cash and cash equivalents were $768.6 million compared with $134.8 million at 2019-end. Long-term debt, less current portion, at the end of 2020 was $2.36 billion versus $1.52 billion at 2019-end.
For the fourth quarter, the company generated free cash flow of $247.7 million, down from $300.8 million a year ago. For 2020, free cash flow was $1.34 billion, up from $873.3 million in 2019.
First-Quarter 2021 View
It expects continued government subsidies and low interest rates to support economic growth, new home construction, as well as residential remodeling. Meanwhile, Mohawk has been experiencing increased inflation in most of the product categories. Hence, the company has been raising prices in response. Given the current situation, it expects first-quarter adjusted EPS within $2.69-$2.79, excluding restructuring charges.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 28.4% due to these changes.
VGM Scores
Currently, Mohawk Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Mohawk Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Mohawk Industries (MHK) Up 18.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Mohawk Industries (MHK - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mohawk Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Mohawk's (MHK - Free Report) Q4 Earnings and Revenue Beat Estimates
Mohawk Industries, Inc. reported solid fourth-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Mohawk reported adjusted earnings of $3.54 per share, beating the consensus mark of $2.88 by 22.9%. The metric also improved 57.3% year over year.
Net sales of $2.64 billion surpassed the consensus estimate of $2.5 billion by 5.6% and grew 9% from the year-ago figure. On a constant-currency and days basis, net sales were up 5.5% year over year. Markedly, the quarterly sales figure is the highest in the company’s history. Although commercial activity remained weak, thereby impacting sales and margins, all markets served by Mohawk witnessed solid residential purchases, with laminate, LVT and sheet vinyl outperforming other flooring categories.
Operating Highlights
Adjusted gross profit of $760.9 million grew 13.9% year over year. Adjusted selling, general and administrative expenses decreased 1.6% from the prior-year level. Adjusted operating income totaled $305.1 million, which improved 49% year over year.
Segment Details
Global Ceramic: Sales in the segment totaled $919.7 million, up 7% year over year. Also, the metric improved 6% on a constant currency and days basis. Adjusted operating income increased to $87.8 million from $53.3 million a year ago owing to improved productivity, higher volume and lower shutdown cost, partially offset by unfavorable price and mix.
Flooring North America: Net sales at the segment came in at $963.7 million, up 3% year over year. The metric was flat on a constant days basis. Moreover, the segment registered adjusted operating income of $91.1 million for the quarter, up 27% from a year ago. Improvement in productivity, increased volume, and reduction in inflation were offset by unfavorable price and mix.
Flooring Rest of the World: Net sales in the segment increased 20% year over year to $758.7 million. On a constant-currency basis, sales were up 13% from the year-ago level. Adjusted operating income was $138 million, up 56.7% from a year ago. The upside was attributed to strengthening volume and productivity, as well as favorable material costs.
2020 Highlights
Adjusted earnings came in at $8.83 per share, up 12.1% from $10.04 a year ago. Net sales were $9.6 billion, down 4.2% from a year ago. Sales were down 3.9% on a constant currency and days basis.
Financial Highlights
As of Dec 31, 2020, cash and cash equivalents were $768.6 million compared with $134.8 million at 2019-end. Long-term debt, less current portion, at the end of 2020 was $2.36 billion versus $1.52 billion at 2019-end.
For the fourth quarter, the company generated free cash flow of $247.7 million, down from $300.8 million a year ago. For 2020, free cash flow was $1.34 billion, up from $873.3 million in 2019.
First-Quarter 2021 View
It expects continued government subsidies and low interest rates to support economic growth, new home construction, as well as residential remodeling. Meanwhile, Mohawk has been experiencing increased inflation in most of the product categories. Hence, the company has been raising prices in response. Given the current situation, it expects first-quarter adjusted EPS within $2.69-$2.79, excluding restructuring charges.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 28.4% due to these changes.
VGM Scores
Currently, Mohawk Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Mohawk Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.