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Mohawk (MHK) to Report Q2 Earnings: What's in the Cards?
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Mohawk Industries, Inc. (MHK - Free Report) is set to report second-quarter 2018 results on Jul 25. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Nevertheless, Mohawk surpassed earnings estimates in three of the last four quarters, the average being 1.5%.
Let us delve into factors that might impact Mohawk’s second-quarter 2018 results.
Innovative Products & Strategic Buyouts Bode Well
Introduction of innovative products across its portfolio is expected to improve segment and boost overall sales, which will be reflected in the upcoming quarterly results.
In 2018, Mohawk expects to make an additional investment of $750 million to complete the existing projects and spend in new initiatives. Management expects to invest roughly $60-$70 million (roughly $30 million incremental) in operations in 2018. It is expected to benefit in the to-be-reported quarter from the expansion of LVT in the United States and Europe; ceramic capacity increases in the United States, Mexico, Italy, Poland, Bulgaria and Russia; luxury laminate in the United States, Europe and Russia; carpet tile in Europe; sheet vinyl in Russia; countertops in the United States and Europe along with carpet and rugs in the United States.
Additionally, the company is likely to benefit from the strategy of driving growth through acquisitions, which will be evident in the to-be-reported quarter. During the first quarter of 2018, Mohawk completed the acquisition of three businesses in the Flooring ROW segment. The company entered into an agreement to acquire Godfrey Hirst Group, the leading flooring company in Australia and New Zealand, further extending Mohawk's global position. The buyouts have enhanced the company’s product portfolio as well as expanded geographic footprint and market share.
These are expected to contribute to the company’s top line significantly in the to-be-reported quarter. The consensus estimate for revenues is pegged at $2.58 billion, reflecting an increase of 5.1% year over year.
High Cost a Woe
Increased startup costs and material inflation are likely to mar second-quarter results. Nevertheless, Mohawk is expected to reduce administrative and indirect costs by a $20-million run rate at the end of the quarter under review. Also, the company expects to cut overhead costs by $5 million on an annual basis in the second quarter.
Considering all these factors, the company expects second-quarter EPS in the range of $3.89-$3.98 compared with $3.72 reported in the prior-year quarter. Also, earnings will benefit from a reduced U.S. tax rate. The Zacks Consensus Estimate for earnings is pegged at $3.91, reflecting an increase of 5% year over year.
What Does the Zacks Model Say?
Our proven model does not conclusively shows that Mohawk is likely to beat estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Mohawk has a Zacks Rank #3 and an Earnings ESP of -0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement.
Here are some companies in the broader Consumer Discretionary space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Extended Stay America, Inc has an Earnings ESP of +3.38% and a Zacks Rank #2.
Marriott Vacations Worldwide Corporation (VAC - Free Report) has an Earnings ESP of +1.74% and a Zacks Rank of #3.
Sinclair Broadcast Group, Inc. (SBGI - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Mohawk (MHK) to Report Q2 Earnings: What's in the Cards?
Mohawk Industries, Inc. (MHK - Free Report) is set to report second-quarter 2018 results on Jul 25. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Nevertheless, Mohawk surpassed earnings estimates in three of the last four quarters, the average being 1.5%.
Let us delve into factors that might impact Mohawk’s second-quarter 2018 results.
Innovative Products & Strategic Buyouts Bode Well
Introduction of innovative products across its portfolio is expected to improve segment and boost overall sales, which will be reflected in the upcoming quarterly results.
In 2018, Mohawk expects to make an additional investment of $750 million to complete the existing projects and spend in new initiatives. Management expects to invest roughly $60-$70 million (roughly $30 million incremental) in operations in 2018. It is expected to benefit in the to-be-reported quarter from the expansion of LVT in the United States and Europe; ceramic capacity increases in the United States, Mexico, Italy, Poland, Bulgaria and Russia; luxury laminate in the United States, Europe and Russia; carpet tile in Europe; sheet vinyl in Russia; countertops in the United States and Europe along with carpet and rugs in the United States.
Additionally, the company is likely to benefit from the strategy of driving growth through acquisitions, which will be evident in the to-be-reported quarter. During the first quarter of 2018, Mohawk completed the acquisition of three businesses in the Flooring ROW segment. The company entered into an agreement to acquire Godfrey Hirst Group, the leading flooring company in Australia and New Zealand, further extending Mohawk's global position. The buyouts have enhanced the company’s product portfolio as well as expanded geographic footprint and market share.
These are expected to contribute to the company’s top line significantly in the to-be-reported quarter. The consensus estimate for revenues is pegged at $2.58 billion, reflecting an increase of 5.1% year over year.
High Cost a Woe
Increased startup costs and material inflation are likely to mar second-quarter results. Nevertheless, Mohawk is expected to reduce administrative and indirect costs by a $20-million run rate at the end of the quarter under review. Also, the company expects to cut overhead costs by $5 million on an annual basis in the second quarter.
Considering all these factors, the company expects second-quarter EPS in the range of $3.89-$3.98 compared with $3.72 reported in the prior-year quarter. Also, earnings will benefit from a reduced U.S. tax rate. The Zacks Consensus Estimate for earnings is pegged at $3.91, reflecting an increase of 5% year over year.
What Does the Zacks Model Say?
Our proven model does not conclusively shows that Mohawk is likely to beat estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Mohawk has a Zacks Rank #3 and an Earnings ESP of -0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement.
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. Price and EPS Surprise | Mohawk Industries, Inc. Quote
Stocks to Consider
Here are some companies in the broader Consumer Discretionary space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Extended Stay America, Inc has an Earnings ESP of +3.38% and a Zacks Rank #2.
Marriott Vacations Worldwide Corporation (VAC - Free Report) has an Earnings ESP of +1.74% and a Zacks Rank of #3.
Sinclair Broadcast Group, Inc. (SBGI - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>