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Mohawk Industries (MHK) Q3 Earnings: What's in the Cards?
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Mohawk Industries, Inc. (MHK - Free Report) is set to report third-quarter fiscal 2016 results on Nov 3, before market opens.
Last quarter, the company posted a positive earnings surprise of 3.27%. Meanwhile, it reported positive earnings surprises in three of the past four quarters, with an average positive surprise of 2.01%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Revenues were soft in the second quarter of 2016 owing to unfavorable currency translations, plant disruptions and postponement of product launches and lowering of inventory levels by a few large customers. However, the company expects sales to improve in the third quarter.
Mohawk Industries’ current booking trends have improved, as a result of which it expects third-quarter sales growth to be higher on a local basis. It also anticipates continued margin expansion across all segments due to process improvements, operational innovation and greater efficiencies. It is also introducing differentiated new products and leveraging customer relationships to gain traction. Mohawk Industries is making significant investments to expand its capacity and grow sales in all products and geographies. LVT sales growth is accelerating, and new plants are making gains in capacity, productivity and efficiency.
Taking these factors into account, Mohawk Industries projected third-quarter EPS guidance in the $3.40 to $3.49 range which represents a 14% to 17% increase on a year-over-year basis, (excluding restructuring charges).
Also, the final production line of the Tennessee ceramic plant will become operational in the third quarter. The system integration for Balterio Laminate will also be completed during the third quarter.
Notably, for the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $3.46, reflecting a 15.96% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $2.25 billion, implying a 4.44% increase.
Earnings Whispers
Our proven model does not conclusively show that Mohawk Industries will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: The earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $3.46. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Mohawk Industries carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Quanta Services, Inc. (PWR - Free Report) , expected to report third-quarter 2016 results on Nov 3, has an earnings ESP of +1.96% and a Zacks Rank #2.
United Rentals, Inc. (URI - Free Report) has an earnings ESP of +3.25% and a Zacks Rank #3. The company is scheduled to release its results on Jan 25.
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Mohawk Industries (MHK) Q3 Earnings: What's in the Cards?
Mohawk Industries, Inc. (MHK - Free Report) is set to report third-quarter fiscal 2016 results on Nov 3, before market opens.
Last quarter, the company posted a positive earnings surprise of 3.27%. Meanwhile, it reported positive earnings surprises in three of the past four quarters, with an average positive surprise of 2.01%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Revenues were soft in the second quarter of 2016 owing to unfavorable currency translations, plant disruptions and postponement of product launches and lowering of inventory levels by a few large customers. However, the company expects sales to improve in the third quarter.
Mohawk Industries’ current booking trends have improved, as a result of which it expects third-quarter sales growth to be higher on a local basis. It also anticipates continued margin expansion across all segments due to process improvements, operational innovation and greater efficiencies. It is also introducing differentiated new products and leveraging customer relationships to gain traction. Mohawk Industries is making significant investments to expand its capacity and grow sales in all products and geographies. LVT sales growth is accelerating, and new plants are making gains in capacity, productivity and efficiency.
Taking these factors into account, Mohawk Industries projected third-quarter EPS guidance in the $3.40 to $3.49 range which represents a 14% to 17% increase on a year-over-year basis, (excluding restructuring charges).
MOHAWK INDS INC Price and EPS Surprise
MOHAWK INDS INC Price and EPS Surprise | MOHAWK INDS INC Quote
Also, the final production line of the Tennessee ceramic plant will become operational in the third quarter. The system integration for Balterio Laminate will also be completed during the third quarter.
Notably, for the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $3.46, reflecting a 15.96% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $2.25 billion, implying a 4.44% increase.
Earnings Whispers
Our proven model does not conclusively show that Mohawk Industries will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: The earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $3.46. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Mohawk Industries carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Summit Materials, Inc. (SUM - Free Report) , slated to report third-quarter 2016 results on Nov 2, has an earnings ESP of +4.11% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Quanta Services, Inc. (PWR - Free Report) , expected to report third-quarter 2016 results on Nov 3, has an earnings ESP of +1.96% and a Zacks Rank #2.
United Rentals, Inc. (URI - Free Report) has an earnings ESP of +3.25% and a Zacks Rank #3. The company is scheduled to release its results on Jan 25.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>