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Calhoun, Georgia-based Mohawk Industries, Inc. (MHK) designs, manufactures, sources, distributes, and markets flooring products for residential and commercial remodeling, and new construction channels. With a market cap of $8.8 billion, Mohawk Industries’ operations span the Americas, Europe, and Indo-Pacific.
The flooring manufacturer has outperformed the broader market over the past year. MHK stock has soared 40.1% on a YTD basis and 72.6% over the past 52 weeks, outpacing the S&P 500 Index’s ($SPX) 25.5% gains in 2024 and 31.3% returns over the past year.
Narrowing the focus, MHK has also outperformed the Invesco Building & Construction ETF’s (PKB) surge of 40% on a YTD basis and 59.6% over the past year.
Mohawk Industries has been facing various headwinds over the past quarters including high inflation and a softening residential and commercial market which has led to a continued drop in its sales figures. MHK stock prices plunged 13.8% in the trading session after the release of its Q3 earnings on Oct. 24. The company reported a 1.7% year-over-year drop in net sales to $2.7 billion. Moreover, it expects the current market conditions to prevail in the next quarter and its Q4 adjusted EPS guidance of $1.77 to $1.87 painted a grim picture for the company’s prospects making investors jittery.
However, despite the challenging market conditions, Mohawk Industries has done commendable work improving efficiency and profitability in the previous quarters. The company reported a 40 basis points adjusted operating margin expansion in Q3 which led to a 3.3% year-over-year growth in adjusted operating income to $240.3 million. Moreover, its adjusted EPS grew by a notable 6.6%, reaching $2.90 exceeding analysts’ consensus estimates.
For the current fiscal year, ending in December, analysts expect MHK to report a 4.7% year-over-year growth in adjusted EPS to $9.62. Moreover, the company has a robust earnings surprise history. It has surpassed analysts' earnings estimates in each of the past four quarters.
MHK stock has a consensus “Moderate Buy” rating overall. Out of the 14 analysts covering the stock, six suggest “Strong Buy,” and eight recommend a “Hold” rating.
This configuration is slightly more bullish than two months ago, when five analysts recommended a “Strong Buy,” and one advised a “Strong Sell” rating.
On Oct. 28, RBC Capital analyst Michael Dahl maintained a “Sector Perform” rating while lowering the price target to $134.
MHK’s mean price target of $159.31 represents a 9.8% premium to current price levels. Meanwhile, the Street-high target of $185 suggests a massive upside potential of 27.6%.
