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1. Company Snapshot

1.a. Company Description

Mohawk Industries, Inc.designs, manufactures, sources, distributes, and markets flooring products for remodeling and new constructions of residential and commercial spaces in the United States, Europe, Russia, and internationally.It operates through three segments: Global Ceramic, Flooring North America (Flooring NA), and Flooring Rest of the World (Flooring ROW).


The Global Ceramic segment provides a range of ceramic tile, porcelain tile, and natural stone products; and sources, markets, and distributes other tile related products.This segment markets and distributes its products under the American Olean, Daltile, Eliane, EmilGroup, KAI, Kerama Marazzi, Marazzi, and Ragno brands.The Flooring NA segment offers floor covering product lines in a range of colors, textures, and patterns, including carpets, carpet tiles, rugs and mats, carpet pads, hardwood, laminate, medium-density fiberboards, luxury vinyl tiles (LVT), and sheet vinyl products.


This segment markets and distributes its flooring products under the Aladdin Commercial, Durkan, IVC, Karastan, Mohawk, Mohawk Group, Mohawk Home, Pergo, Portico, and Quick-Step brands.The Flooring ROW segment provides wood flooring and vinyl flooring, as well as laminates, roofing elements, sheet vinyl, LVT, insulation boards, medium-density fiberboards, chipboards, and other woods products under the Feltex, Godfrey Hirst, Hycraft, IVC Commercial, IVC Home, Leoline, Moduleo, Pergo, Quick-Step, and Unilin and Xtratherm brands; and licenses its intellectual property to flooring manufacturers.Mohawk Industries, Inc.


was incorporated in 1988 and is headquartered in Calhoun, Georgia.

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1.b. Last Insights on MHK

Mohawk Industries' recent performance was negatively impacted by weak Q3 earnings, missing estimates, and revenue pressure amid soft demand and macroeconomic headwinds. Despite cost-cutting efforts, adjusted net profits and cash flows continue to decline. However, some investors remain optimistic, with Bailard Inc. increasing its holdings by 42.1%. The company's Q3 revenue beat estimates, but margin pressures persist. Institutional investors, such as Vanguard and Ethic Inc., have reduced their positions, while Yousif Capital Management LLC slightly increased its stake.

1.c. Company Highlights

2. Mohawk Industries' Q3 Earnings: A Closer Look

Mohawk Industries reported third-quarter net sales of $2.8 billion, slightly ahead of the prior year as reported and flat on a constant basis. The company's adjusted earnings per share (EPS) came in at $2.67, reflecting benefits from ongoing productivity and restructuring initiatives, as well as the impact of favorable currency exchange and lower interest expense, offset by higher input costs and temporary plant shutdown. The actual EPS was slightly lower than the estimated $2.68.

Publication Date: Oct -27

📋 Highlights
  • Q3 Net Sales & EPS Performance:: $2.8 billion sales matched expectations, with adjusted EPS of $2.67 driven by productivity savings, favorable currency, and lower interest expenses, despite higher input costs.
  • Restructuring Savings:: $32 million annualized savings from new actions, totaling $110 million in 2024 after asset sales, with $20 million net cash cost.
  • Free Cash Flow & Buybacks:: $310 million free cash flow generated in Q3, funding $40 million in share repurchases (315,000 shares).
  • Annual Tariff Impact:: 20% average tariff cost on imported products ($110 million annual pre-mitigation), offset by pricing actions and supply chain optimizations.
  • 2024 Outlook:: EPS guidance of $1.90–$2.00 for Q4; 2025 projected as transitional year with margin improvement from housing recovery and lower interest rates.

Segment Performance

The Global Ceramic segment had sales of just over $1.1 billion, a 4.4% improvement as reported and 1.8% on an adjusted basis due to favorable price/mix in both channel and product categories, partially offset by lower unit volume. Operating income on an adjusted basis was $90 million or 8.1%, which was a decline of approximately 50 basis points. As Paul De Cock mentioned, the segment's performance benefited from premium collections, commercial sales, and expanded distribution.

Restructuring and Cost Savings

The company is lowering its cost structure without impacting its long-term growth potential when the market recovers. Mohawk has identified additional restructuring opportunities to rationalize less efficient assets and streamline logistics operations and administrative functions, which will result in annualized savings of approximately $32 million. Combined with previously announced restructuring actions, the company anticipates delivering $110 million in savings this year.

Valuation and Outlook

Analysts estimate next year's revenue growth at 2.3%. With a P/E Ratio of 17.74 and an EV/EBITDA of 7.9, the market is pricing in a moderate growth outlook. The company's Return on Invested Capital (ROIC) is 3.96%, and its Return on Equity (ROE) is 5.26%. As Jeff Lorberbaum mentioned, the company is taking actions to prepare for the recovery of the markets, which are at the bottom of the cycle. With a Free Cash Flow Yield of 13.45%, the stock appears to be undervalued.

Tariff Impact and Pricing

The company is managing the impact of tariffs on its U.S. imported product offering through pricing actions and supply chain optimization. Most tariffs today range between 15% and 50% of product costs, with an average tariff cost of around 20% on imported products, translating to an annual impact of about $110 million before mitigations.

3. NewsRoom

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Brandes Investment Partners LP Buys 46,076 Shares of Mohawk Industries, Inc. $MHK

Dec -02

Source: defenseworld.net

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History Says These 7 S&P 500 Stocks Often Rally In December

Dec -01

Source: feeds.benzinga.com

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Mohawk Industries, Inc. $MHK Shares Bought by Bailard Inc.

Nov -15

Source: defenseworld.net

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Mohawk Industries Announces Planned Leadership Transition

Nov -05

Source: globenewswire.com

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Teacher Retirement System of Texas Increases Position in Mohawk Industries, Inc. $MHK

Nov -05

Source: defenseworld.net

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Ethic Inc. Lowers Position in Mohawk Industries, Inc. $MHK

Oct -30

Source: defenseworld.net

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D.A. Davidson & CO. Has $468,000 Stake in Mohawk Industries, Inc. $MHK

Oct -30

Source: defenseworld.net

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Mohawk Industries: Too Early To Call For A Buy Rating

Oct -30

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.99%)

6. Segments

Global Ceramic

Expected Growth: 2.0%

Mohawk Industries' Global Ceramic segment growth of 2.0% is driven by increasing demand for premium ceramic products, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on product innovation, operational efficiency, and cost savings initiatives contribute to its growth momentum.

Flooring NA

Expected Growth: 1.8%

Mohawk Industries' Flooring NA segment growth of 1.8% is driven by increasing demand for hard surface products, particularly luxury vinyl tile (LVT) and wood flooring, as well as a strong recovery in the new construction market. Additionally, the company's focus on product innovation, operational efficiency, and strategic pricing initiatives also contribute to the segment's growth.

Flooring ROW

Expected Growth: 2.2%

Mohawk Industries' Flooring ROW segment growth of 2.2% is driven by increasing demand for premium and sustainable flooring products, particularly in the European market. Additionally, the company's strategic acquisitions and investments in digital marketing and e-commerce platforms have enhanced its distribution channels and customer reach, contributing to the segment's growth.

7. Detailed Products

Flooring

Mohawk Industries, Inc. offers a wide range of flooring products, including hardwood, laminate, ceramic, porcelain, and luxury vinyl tile (LVT) flooring solutions for residential and commercial applications.

Ceramic Tile

Mohawk's ceramic tile products offer a variety of styles, colors, and textures for walls, floors, and countertops, suitable for both residential and commercial projects.

Laminate Flooring

Mohawk's laminate flooring products mimic the look and feel of natural wood and stone, offering a cost-effective and eco-friendly alternative for homeowners and commercial builders.

Hard Surface Flooring

Mohawk's hard surface flooring products include hardwood, engineered wood, and exotic wood species, suitable for residential and commercial applications.

Commercial Flooring

Mohawk's commercial flooring products are designed for high-traffic areas, offering durability, ease of maintenance, and aesthetic appeal for offices, hospitals, schools, and other commercial spaces.

8. Mohawk Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Mohawk Industries, Inc. operates in a industry where substitutes are available, but they are not a significant threat to the company's market share. The company's products are differentiated, and customers are loyal to the brand.

Bargaining Power Of Customers

Mohawk Industries, Inc. has a diverse customer base, and no single customer has significant bargaining power. The company's products are widely distributed, and customers have limited negotiating power.

Bargaining Power Of Suppliers

Mohawk Industries, Inc. has a moderate level of dependence on its suppliers. While the company has some bargaining power, suppliers also have some negotiating power due to the specialized nature of the products.

Threat Of New Entrants

The threat of new entrants in the industry is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles. Mohawk Industries, Inc. has a strong brand presence and established distribution channels, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The industry in which Mohawk Industries, Inc. operates is highly competitive, with several established players competing for market share. The company faces intense competition from rivals, which can lead to pricing pressure and reduced profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.58%
Debt Cost 3.95%
Equity Weight 73.42%
Equity Cost 10.70%
WACC 8.90%
Leverage 36.20%

11. Quality Control: Mohawk Industries, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.2/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

110.69$

Current Price

110.69$

Potential

-0.00%

Expected Cash-Flows