Industries Inc (MHK - Analyst Report)
are many industry insiders who believe housing is making a turnaround.
I have yet to agree that the action in housing we are seeing is
substantial in terms of price.
thing we do have is new and
existing home sales on the rise. This to
me is a positive for a company like Mohawk. Whether you think that the
average consumer is finally buying houses on confidence or that
simply scooping up great deals at rock bottom prices, both buyers will
have repairs to make.
most common and sometimes most
valuable is flooring and that is where Mohawk comes in.
Company Description &
Mohawk is a primary supplier of residential and commercial flooring.
offers a complete selection of carpet, ceramic tile, wood, stone,
vinyl, rugs and other home products.
may be familiar with their name
brands in the industry, which include Mohawk, Karastan, Ralph Lauren,
Bigelow, Quick Step, Dal-Tile and American Olean.
flooring is everywhere; from
small boutiques and factory direct shops to major retailers across the
and the world including Home Depot, Bloomingdales, Lowe’s, Macy’s,
also runs its own trucking
fleet and operates over 300 local distribution locations.
are some housing numbers to
Home sales rose 5.0% in
December to an annual rate of 4.61 million
to a year ago, sales are up
- Sales of single
family homes were up
4.6% to an annual rate of 4.11 million, and were 4.3% above a year ago
- Condo sales were up
November to an annual rate of 500,000
median price of an existing
single family home was down 2.5% from a year ago to 165,100
- The median price of a
owned condo fell 3.0% to $160,000.
tells me that more homes are
changing hands, but still at lower prices.
The bulk of home sales are distressed, existing homes (foreclosures)
that most likely require some “work” to become not just livable, but
to the new buyer.
activity is all investors,
chances are they are also going to be replacing flooring, but most
cheaper solutions like carpet.
way, I think the present environment
bodes very well for companies like MHK.
Mohawk’s financials and stock price are beginning to reflect this
after a couple rough earnings quarters.
of them as the second
derivative to a housing and consumer recovery.
Mohawk is a mid-cap company (4.38 billion) that is trading at about 22
trailing earnings (P/E). Looking forward, Zacks Consensus
calling for that number to drop to 17 with no change in price from
hit the Zacks Rank 1 Strong
Buy list January 26th, coming from a Zacks Rank 3 about a week ago.
reported a 2% quarterly sales
decrease at their last earnings report, but showed year over year sales
of 10% and a 12% rise in earnings per share in the same period with
of roughly 5.3 billion in FY2010. Mohawk is expected to earn
FY2011 according to the Zacks Consensus Estimate.
Even with several tough quarters, we saw at least one analyst revise
quarter and next year’s earnings estimates up within the past month. The others
have stood firm on their estimates to date. Mohawk will report
Q4 results on
are for Mohawk to generate
$0.72 in income this quarter. Of the 11 analysts who cover
consensus is for the company to grow earnings by 17.85% in FY2011 with
jump of 25.38% in FY2012.
terms of the magnitude of analyst
estimate trends, we are seeing all of the consensus estimates lower
were 90 days ago from current quarter, out to FY 2012.
Analysts may still make adjustments ahead of
the next report.
missed estimates last quarter
by 3.49%, which they warned of. But the
average earnings surprise is still a positive 4.82% over the past year.
Market Performance &
Mohawk stock has just recently begun picking up momentum.
October marked the start of a major rally for
MHK. The stock finds itself in a clean, strong
bullish channel and has been making a series of higher highs and lower
over the past 2 months.
52 week high of $68.86 was
made back in May of 2011. MHK has
remained above its 50 day moving average since early October and just
jumped above its 200 day moving average which currently stands at
with its struggles in 2011, Mohawk
still managed to outpace the S&P 500 by 6% over the past year
and almost 15%
over the last twelve weeks. The recent
retracement in MHK is healthy if it is going to continue its bullish
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
Whisper Trader Service.
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