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In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 4.6% but declined 37.4% year over year. Net sales beat the Zacks Consensus Estimate by 0.6% but fell 6.4% from the year-ago quarter’s levels. MHK’s earnings surpassed expectations in 12 of the trailing 13 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has declined to $2.71 per share from $2.72 over the past 60 days. The estimated figure indicates a 19.5% decline from the year-ago level.
The consensus estimate for net sales is pegged at $2.73 billion, suggesting a 6.4% decline from the year-ago reported figure of $2.92 billion.
Factors to Note
Mohawk's third-quarter earnings and revenues are expected to have declined year over year due to seasonal softening demand in the housing and remodeling markets, driven by summer holidays, reduced consumer spending and low production in Europe. Higher interest rates and inflationary pressure have been moderating demand for homes, impacting consumer discretionary spending. The company has been facing challenges from rising inflation, labor shortages and volatile European gas prices.
However, strategic investments in new products and enhanced merchandising & marketing activities are likely to have aided sales. It expects the commercial sector to remain stronger than residential, but weakness in the office channel is expected to impact the business to some extent.
MHK expects third-quarter adjusted earnings (excluding restructuring, acquisition and other charges) in the range of $2.62-$2.72 per share. Our model suggests the same to decline by 21.5% year over year to $2.62 per share.
We expect Global Ceramic’s net sales to fall by 7.1% year over year to $1,018.9 million. Flooring NA net sales are likely to decline by 13.1% year over year to 946.4 million and Flooring ROW is expected to be down by 1.5% year over year to $720.3 million.
Our expectation for adjusted operating income for the Global Ceramic, Flooring NA and businesses suggests a decline of 35.8% and 35.5%, respectively, from the year-ago period’s levels. However, Flooring ROW business’ adjusted operating income is expected to increase 33.8% year over year.
The company's bottom line is likely to have been affected by inflationary pressure, primarily in material, energy and transportation costs. It expects continued pressure on pricing and mix, partially offset by the flow-through of lower material and energy costs in the third quarter. For the third quarter, our model predicts consolidated adjusted operating margin to decline 80 basis points year over year to 8.5%.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Mohawk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Mohawk has an Earnings ESP of -3.38%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
Caesars Entertainment, Inc. (CZR - Free Report) has an Earnings ESP of +14.23% and a Zacks Rank #2.
CZR’s earnings surpassed the consensus mark in all the trailing four quarters, the average surprise being 74.3%. Earnings for the to-be-reported quarter are expected to grow 8.3% year over year.
Marriott International, Inc. (MAR - Free Report) has an Earnings ESP of +4.23% and a Zacks Rank #3.
MAR’s earnings surpassed the consensus mark in all the trailing four quarters, the average surprise being 5.5%. Earnings for the to-be-reported quarter are expected to grow 23.7% year over year.
DraftKings Inc. (DKNG - Free Report) has an Earnings ESP of +17.52% and a Zacks Rank #3.
DKNG’s earnings topped the consensus mark in three of the last four quarters, with the average being 12%. Earnings for the to-be-reported quarter are expected to rise 31% year over year.
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Mohawk (MHK) to Report Q3 Earnings: Factors to Consider
Mohawk Industries, Inc. (MHK - Free Report) is scheduled to report third-quarter 2023 results on Oct 26, after market close.
In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 4.6% but declined 37.4% year over year. Net sales beat the Zacks Consensus Estimate by 0.6% but fell 6.4% from the year-ago quarter’s levels. MHK’s earnings surpassed expectations in 12 of the trailing 13 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has declined to $2.71 per share from $2.72 over the past 60 days. The estimated figure indicates a 19.5% decline from the year-ago level.
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. price-eps-surprise | Mohawk Industries, Inc. Quote
The consensus estimate for net sales is pegged at $2.73 billion, suggesting a 6.4% decline from the year-ago reported figure of $2.92 billion.
Factors to Note
Mohawk's third-quarter earnings and revenues are expected to have declined year over year due to seasonal softening demand in the housing and remodeling markets, driven by summer holidays, reduced consumer spending and low production in Europe. Higher interest rates and inflationary pressure have been moderating demand for homes, impacting consumer discretionary spending. The company has been facing challenges from rising inflation, labor shortages and volatile European gas prices.
However, strategic investments in new products and enhanced merchandising & marketing activities are likely to have aided sales. It expects the commercial sector to remain stronger than residential, but weakness in the office channel is expected to impact the business to some extent.
MHK expects third-quarter adjusted earnings (excluding restructuring, acquisition and other charges) in the range of $2.62-$2.72 per share. Our model suggests the same to decline by 21.5% year over year to $2.62 per share.
We expect Global Ceramic’s net sales to fall by 7.1% year over year to $1,018.9 million. Flooring NA net sales are likely to decline by 13.1% year over year to 946.4 million and Flooring ROW is expected to be down by 1.5% year over year to $720.3 million.
Our expectation for adjusted operating income for the Global Ceramic, Flooring NA and businesses suggests a decline of 35.8% and 35.5%, respectively, from the year-ago period’s levels. However, Flooring ROW business’ adjusted operating income is expected to increase 33.8% year over year.
The company's bottom line is likely to have been affected by inflationary pressure, primarily in material, energy and transportation costs. It expects continued pressure on pricing and mix, partially offset by the flow-through of lower material and energy costs in the third quarter. For the third quarter, our model predicts consolidated adjusted operating margin to decline 80 basis points year over year to 8.5%.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Mohawk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Mohawk has an Earnings ESP of -3.38%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
Caesars Entertainment, Inc. (CZR - Free Report) has an Earnings ESP of +14.23% and a Zacks Rank #2.
CZR’s earnings surpassed the consensus mark in all the trailing four quarters, the average surprise being 74.3%. Earnings for the to-be-reported quarter are expected to grow 8.3% year over year.
Marriott International, Inc. (MAR - Free Report) has an Earnings ESP of +4.23% and a Zacks Rank #3.
MAR’s earnings surpassed the consensus mark in all the trailing four quarters, the average surprise being 5.5%. Earnings for the to-be-reported quarter are expected to grow 23.7% year over year.
DraftKings Inc. (DKNG - Free Report) has an Earnings ESP of +17.52% and a Zacks Rank #3.
DKNG’s earnings topped the consensus mark in three of the last four quarters, with the average being 12%. Earnings for the to-be-reported quarter are expected to rise 31% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.