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In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 2.6% but declined 18.6% year over year. Net sales beat the consensus estimate by 1.2% but decreased 5.2% from the year-ago quarter.
MHK’s earnings surpassed expectations in each of the trailing four quarters, with an average of 11.6%.
Trend in Estimate Revision
The Zacks Consensus Estimate for Mohawk’s fourth-quarter 2023 earnings is pegged at $1.85 per share, indicating a 40.2% rise from the prior-year reported figure of $1.32. The estimated figure moved down from $1.86 per share in the past 60 days.
The consensus estimate for net sales is pegged at $2.58 billion, suggesting a 2.7% decrease from the year-ago reported figure of $2.65 billion.
Factors to Note
Mohawk's fourth-quarter revenues are likely to be lower year over year. Higher interest rates and inflationary pressure have been moderating demand for homes, impacting consumer discretionary spending.
Softness in new construction and remodeling activities in both residential and commercial channels and postponed spending on new projects are likely to have ailed the bottom line to some extent. MHK expects continued pressure from foreign exchange rates in the fourth quarter.
The company expects fourth-quarter adjusted earnings (excluding restructuring, acquisition and other charges) in the range of $1.80-$1.90 per share.
We expect Global Ceramic’s net sales to rise 3.8% year over year to $1.03 billion. Flooring North America (NA) net sales are likely to decline 6% year over year to $889.3 million and Flooring Rest of World (ROW) is expected to be down 8.6% year over year to $655.2 million.
Our expectation for adjusted operating income for the Global Ceramic business suggests a decline of 13% from the year-ago period’s levels. However, Flooring NA business’ adjusted operating income is expected to increase significantly and Flooring ROW is likely to rise 7.3% year over year.
Strategic investments in new products and enhanced merchandising & marketing activities are likely to have aided sales. The company's bottom line is expected to have increased year over year on the back of various strategic initiatives undertaken to improve profitability.
What the Zacks Model Unveils
Our proven model does not 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. Unfortunately, that is not the case here, as you will see below.
Currently, MHK has a Zacks Rank #4 (Sell) and an Earnings ESP of +1.76%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With Favorable Combination
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that they have the right combination of elements to deliver an earnings beat this time around.
STRA’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 7.3%. Earnings for the to-be-reported quarter are expected to grow 75.6% year over year.
Choice Hotels International, Inc. (CHH - Free Report) currently has an Earnings ESP of +1.48% and a Zacks Rank #3.
CHH’s earnings topped the consensus mark in three of the last four quarters and missed the same in the other one, the average surprise being 5.2%. Earnings for the to-be-reported quarter are expected to increase 7.1% year over year.
Marriott International, Inc. (MAR - Free Report) presently has an Earnings ESP of +1.73% and a Zacks Rank #3.
MAR’s earnings topped the consensus mark in each of the last four quarters, the average earnings surprise being 5.6%. Earnings for the to-be-reported quarter are likely to grow 8.2% year over year.
Image: Bigstock
Mohawk (MHK) Gears Up to Post Q4 Earnings: Factors to Note
Mohawk Industries, Inc. (MHK - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 8, after market close.
In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 2.6% but declined 18.6% year over year. Net sales beat the consensus estimate by 1.2% but decreased 5.2% from the year-ago quarter.
MHK’s earnings surpassed expectations in each of the trailing four quarters, with an average of 11.6%.
Trend in Estimate Revision
The Zacks Consensus Estimate for Mohawk’s fourth-quarter 2023 earnings is pegged at $1.85 per share, indicating a 40.2% rise from the prior-year reported figure of $1.32. The estimated figure moved down from $1.86 per share in the past 60 days.
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 $2.58 billion, suggesting a 2.7% decrease from the year-ago reported figure of $2.65 billion.
Factors to Note
Mohawk's fourth-quarter revenues are likely to be lower year over year. Higher interest rates and inflationary pressure have been moderating demand for homes, impacting consumer discretionary spending.
Softness in new construction and remodeling activities in both residential and commercial channels and postponed spending on new projects are likely to have ailed the bottom line to some extent. MHK expects continued pressure from foreign exchange rates in the fourth quarter.
The company expects fourth-quarter adjusted earnings (excluding restructuring, acquisition and other charges) in the range of $1.80-$1.90 per share.
We expect Global Ceramic’s net sales to rise 3.8% year over year to $1.03 billion. Flooring North America (NA) net sales are likely to decline 6% year over year to $889.3 million and Flooring Rest of World (ROW) is expected to be down 8.6% year over year to $655.2 million.
Our expectation for adjusted operating income for the Global Ceramic business suggests a decline of 13% from the year-ago period’s levels. However, Flooring NA business’ adjusted operating income is expected to increase significantly and Flooring ROW is likely to rise 7.3% year over year.
Strategic investments in new products and enhanced merchandising & marketing activities are likely to have aided sales. The company's bottom line is expected to have increased year over year on the back of various strategic initiatives undertaken to improve profitability.
What the Zacks Model Unveils
Our proven model does not 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. Unfortunately, that is not the case here, as you will see below.
Currently, MHK has a Zacks Rank #4 (Sell) and an Earnings ESP of +1.76%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With Favorable Combination
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that they have the right combination of elements to deliver an earnings beat this time around.
Strategic Education, Inc. (STRA - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
STRA’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 7.3%. Earnings for the to-be-reported quarter are expected to grow 75.6% year over year.
Choice Hotels International, Inc. (CHH - Free Report) currently has an Earnings ESP of +1.48% and a Zacks Rank #3.
CHH’s earnings topped the consensus mark in three of the last four quarters and missed the same in the other one, the average surprise being 5.2%. Earnings for the to-be-reported quarter are expected to increase 7.1% year over year.
Marriott International, Inc. (MAR - Free Report) presently has an Earnings ESP of +1.73% and a Zacks Rank #3.
MAR’s earnings topped the consensus mark in each of the last four quarters, the average earnings surprise being 5.6%. Earnings for the to-be-reported quarter are likely to grow 8.2% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.