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Mohawk Industries, Inc. (MHK)
:MHK
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Mohawk
(NYSE:MHK)67Neutral
Positive Factors
Market Share
Mohawk is gaining share, especially in North America where volume grew YoY in a down market led by laminate, residential carpet, and commercial carpet tile.
Valuation
Shares trade at 5.8x 2026 EV/EBITDA below its historical valuation and below its historical discount to building product peers, making valuation attractive.
Negative Factors
Operational Efficiency
Management indicated that ERP issues were related to 'order to cash' problems, which might affect operational efficiency.
Mohawk (MHK) vs. S&P 500 (SPY)
Market Cap
$7.40B
Dividend YieldN/A
Average Volume (3M)831.61K
Price to Earnings (P/E)14.4
Beta (1Y)1.52
Revenue Growth-2.68%
EPS GrowthN/A
CountryUS
Employees41,900
SectorConsumer Cyclical
Sector Strength53
IndustryHome and Homeware
Share Statistics
EPS (TTM)8.13
Shares Outstanding62,587,227
10 Day Avg. Volume681,727
30 Day Avg. Volume831,609
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.68
Price to Cash Flow (P/CF)4.70
P/FCF Ratio7.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$144.21Price Target Upside23.25% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Mohawk Business Overview & Revenue Model
Company DescriptionMohawk Industries, Inc. (MHK) is a leading global flooring manufacturer that designs, manufactures, sources, and distributes flooring products for residential and commercial applications. Headquartered in Calhoun, Georgia, the company operates in three primary segments: Global Ceramic, Flooring North America, and Flooring Rest of the World. Mohawk's extensive product portfolio includes carpet, rugs, ceramic tile, laminate, wood, stone, and luxury vinyl tile, making it one of the most diversified flooring companies worldwide.
How the Company Makes MoneyMohawk Industries generates revenue primarily through the sale of its extensive range of flooring products across its three key segments. The Global Ceramic segment is responsible for creating and distributing ceramic tile, porcelain tile, and natural stone flooring products. The Flooring North America segment focuses on selling carpet, laminate, resilient, hardwood, and other flooring products within the United States and Canada. The Flooring Rest of the World segment targets international markets outside North America, offering similar flooring solutions. Mohawk's revenue model is heavily reliant on the housing and construction industries, with its earnings influenced by factors such as new residential constructions, remodeling projects, and commercial building activities. The company also benefits from strategic acquisitions and partnerships that enhance its product offerings and market reach.
Mohawk Financial Statement Overview
Summary
Mohawk Industries shows signs of recovery with improving profitability and strong cash flow management. The balance sheet is robust with low leverage and a solid equity base, providing stability. However, the decline in revenue growth remains a challenge.Income Statement
Mohawk's TTM (Trailing-Twelve-Months) gross profit margin is approximately 25.2%, indicating good cost management relative to revenue. The net profit margin improved to 4.77% from a negative margin in the previous year, showcasing a return to profitability. However, revenue has declined by 2.68% year-over-year, reflecting challenges in growing sales. The EBIT and EBITDA margins are 6.88% and 11.32% respectively, indicating moderate operating performance.65
Positive
Balance Sheet
The company's debt-to-equity ratio improved to 0.13, reflecting a strong leverage position. Return on equity is 6.85%, which is a positive sign compared to prior negative returns. The equity ratio stands at 59.09%, indicating a solid equity base relative to total assets, enhancing financial stability.72
Positive
Cash Flow
Free cash flow grew by 17.3% year-over-year, illustrating improved cash generation capabilities. The operating cash flow to net income ratio is 2.19, suggesting strong cash conversion efficiency. The free cash flow to net income ratio is 1.62, indicating effective cash management and reinvestment potential.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 9.28B | 10.84B | 11.14B | 11.74B | 11.20B | 9.55B | Gross Profit |
| 2.30B | 2.69B | 2.71B | 2.94B | 3.27B | 2.43B | EBIT |
| 485.56M | 694.70M | -287.81M | 931.60M | 755.53M | 29.25M | EBITDA |
| 1.05B | 694.70M | 531.94M | 883.69M | 2.00B | 1.43B | Net Income Common Stockholders |
| 482.44M | 517.70M | -439.52M | 25.25M | 1.03B | 515.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 666.60M | 0.00 | 642.55M | 667.62M | 591.89M | 1.34B | Total Assets |
| 12.78B | 12.78B | 13.56B | 14.12B | 14.22B | 14.33B | Total Debt |
| 950.90M | 555.90M | 3.15B | 3.22B | 2.73B | 3.07B | Net Debt |
| 284.30M | 555.90M | 2.51B | 2.71B | 2.46B | 2.30B | Total Liabilities |
| 5.22B | 5.22B | 5.93B | 6.10B | 5.80B | 5.79B | Stockholders Equity |
| 7.56B | 64.20M | 7.62B | 8.02B | 8.43B | 8.54B |
| Cash Flow | Free Cash Flow | ||||
| 1.16B | 679.50M | 716.30M | 88.41M | 633.00M | 1.34B | Operating Cash Flow |
| 1.62B | 1.13B | 1.33B | 669.15M | 1.31B | 1.77B | Investing Cash Flow |
| -472.61M | -454.40M | -970.34M | -625.34M | -556.75M | -954.80M | Financing Cash Flow |
| -521.47M | -629.50M | -210.68M | 194.35M | -1.23B | -188.19M |
Mohawk Technical Analysis
Negative
117.01
Price Trends
120.76
Negative
130.11
Negative
133.47
Negative
Market Momentum
-1.59
Negative
45.91
Neutral
74.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MHK, the sentiment is Negative. The current price of 117.01 is below the 20-day moving average (MA) of 117.74, below the 50-day MA of 120.76, and below the 200-day MA of 133.47, indicating a bearish trend. The MACD of -1.59 indicates Negative momentum. The RSI at 45.91 is Neutral, neither overbought nor oversold. The STOCH value of 74.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MHK.
Mohawk Risk Analysis
Mohawk disclosed 27 risk factors in its most recent earnings report. Mohawk reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mohawk Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $10.99B | 7.60 | 20.38% | 0.83% | 5.86% | 12.20% | |
67 Neutral | $7.40B | 14.39 | 6.82% | ― | -2.68% | ― | |
60 Neutral | $1.17B | ― | -50.56% | 7.09% | -7.28% | -272.76% | |
60 Neutral | $15.60B | 19.60 | -118.61% | 1.59% | -1.74% | -6.91% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
47 Neutral | $5.07B | 13.03 | -12.77% | 7.64% | -14.64% | -167.22% | |
44 Neutral | $478.55M | ― | -25.51% | ― | -15.09% | -358.01% |
* Consumer Cyclical Sector Average
Performance Comparison
MHK
Mohawk
117.01
-4.65
-3.82%
LEG
Leggett & Platt
8.62
-11.10
-56.29%
MAS
Masco
75.20
-0.48
-0.63%
TOL
Toll Brothers
109.27
-10.54
-8.80%
WHR
Whirlpool
94.87
-7.22
-7.07%
JELD
JELD-WEN
6.16
-12.14
-66.34%
Mohawk Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -4.07% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
Mohawk Industries faced significant challenges in 2024 with decreased full-year sales, weak residential demand, and margin pressures from increased costs and competitive pricing. However, the company implemented effective restructuring actions, maintained strong cash flow, and pursued strategic initiatives to improve productivity and product mix, positioning itself for future recovery.Highlights
Strong Free Cash Flow and Share Buybacks
Generated free cash flow of $680 million and repurchased 1.3 million shares of stock for $161 million in 2024, with a strong balance sheet featuring available liquidity of $1.6 billion and debt leverage of 1.1 times.
Restructuring Efforts and Cost Savings
Initiated significant restructuring actions expected to yield cost savings of approximately $285 million when completed in 2026, with $80 million realized in 2024 and $100 million expected in 2025.
Productivity Improvements and Strategic Initiatives
Implemented cost containment initiatives, product reengineering, and marketing strategies which contributed to improved productivity and cost management, despite challenging market conditions.
Positive Mix from Product Innovations
Launched new products with higher average selling prices, contributing to a positive mix impact and positioning the company for potential improvement in market conditions.
Lowlights
Decline in Full-Year Net Sales
Full-year net sales decreased approximately 3% due to higher interest rates, lower housing turnover, and reduced remodeling activity.
Challenging Market Conditions
Continued weak residential demand, suppressed home sales, and intense competition for volume led to lower pricing and margin pressures across the industry.
Impact of Flooring North America System Issues
System conversion issues in the Flooring North America segment expected to impact Q1 2025 operating income by $25 to $30 million and cause a sales impact of approximately $25 to $50 million.
Increased Input Costs and Margin Compression
Rising material and labor costs, along with competitive pricing pressures, led to compressed margins in several segments, including Global Ceramic and Flooring Rest of the World.
Company Guidance
During the Mohawk Industries 4th Quarter 2024 Earnings Conference Call, the company provided guidance for the 1st quarter of 2025. They projected Q1 adjusted earnings per share (EPS) to be in the range of $1.34 to $1.44, excluding any restructuring or one-time charges, with an estimated EPS impact of $0.35 due to system issues in the Flooring North America segment. The company anticipates ongoing market softness, particularly due to elevated interest rates and weak housing turnover, which will continue to pressure pricing. They expect material and labor costs to rise, reducing margins, although they aim to mitigate this through cost reductions and process improvements. Despite these challenges, Mohawk plans to focus on capital expenditures that maximize sales, improve product mix, and reduce costs. Their restructuring actions are expected to generate annualized savings of about $285 million by 2026. The company remains confident in its long-term growth potential, supported by strong cash flow, available liquidity of $1.6 billion, and a debt leverage ratio of 1.1 times.Mohawk Corporate Events
Executive/Board Changes
Mohawk CFO William Harkins Announces Resignation
Neutral
Feb 28, 2025
On February 25, 2025, William W. Harkins announced his resignation from Mohawk Industries, Inc., effective March 14, 2025, to pursue another opportunity. In response, James F. Brunk will temporarily assume the roles of Chief Accounting Officer and Corporate Controller in addition to his duties as Chief Financial Officer while the company searches for a permanent replacement.
Business Operations and StrategyFinancial Disclosures
Mohawk Navigates System Disruptions in Flooring Segment
Neutral
Jan 24, 2025
After the end of 2024, Mohawk’s Flooring North America segment faced issues with a new order management system, leading to shipping and invoicing disruptions. However, most system processes have been corrected, improving shipping rates and normalizing backlog levels. Despite these challenges, manufacturing and distribution operations remain stable. Mohawk plans to release its fourth quarter and full-year results on February 6, 2025, and will address the system conversion impact during the investor call.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.