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Mohawk Estimates Rise As Housing Market Improves

Thu, 30 May 2013 11:24:15 -0400

Mohawk Industries recently delivered a solid first quarter earnings beat thanks to an improving U.S. housing market and expanding profit margins. Analysts revised their estimates significantly higher for both 2013 and 2014 off the first quarter beat, sending the stock to a Zacks Rank #1 (Strong Buy). Based on current consensus estimates, analysts expect excellent growth from Mohawk over the next couple of years. With valuation still at reasonable levels, shares of Mohawk offers strong upside potential. Mohawk Industries is a global flooring manufacturer focused on the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Its brands include American Olean, Bigelow, Dal-Tile, Durkan, Karastan, Lees, Marazzi, Mohawk, Pergo, Unilin and Quick-Step. Mohawk delivered solid first quarter results on May 2. Adjusted earnings per share jumped 50% to 87 cents, beating the Zacks Consensus Estimate of 84 cents. Net sales rose 6% to $1.487 billion, driven by strong gains in the Dal-Tile and Unilin segments. The gross profit margin did decline slightly from 25.5% to 25.4% of net sales. However, the adjusted operating profit margin expanded 140 basis points to 6.5% of net sales as the company leveraged its selling, general and administrative expenses. This led to a stellar 34% increase in adjusted operating income. Special Offer: Stock picks from Forbes Dividend Investor are up 20.1% since July. Average yield on buys is 5.7%. Click here now to try Forbes Dividend Investor free for 30 days. Although Mohawk reported a relatively modest 3 cent EPS beat for the first quarter, analysts revised their estimates significantly higher for both 2013 and 2014. This sent the stock to a Zacks Rank #1 (Strong Buy). In fact, the 2013 Zacks Consensus Estimate has jumped from $5.16 to $5.80 over the last 60 days. And the 2014 consensus has increased from $6.24 to $7.05 over the same period. You can see these sharp increases in the company's 'Price & Consensus' chart: Analysts expect strong growth from Mohawk over the next couple of years too. Based on current consensus estimates, analysts project 53% EPS growth this year and 22% growth next year. The Zacks Industry Rank is also very bullish for Mohawk. The 'textile/home furnishings' industry is the #1 ranked industry out of 265. Shares of Mohawk currently trade at 18x 12-month forward earnings, which is above its 10-year median of 15x. However, when you factor in the strong earnings growth projections and excellent earnings momentum, this premium seems reasonable. With strong industry tailwinds, rising estimates and stellar earnings growth projections, Mohawk Industries offers attractive upside potential. Todd Bunton is the growth & income stock strategist for Zacks Investment Research and editor of the Income Plus Investor service. Read the full Snapshot Report on MHK

Ben Bernanke

Wed, 20 Feb 2013 15:10:21 -0500

Fed Pats Itself On The Back For Housing Boost, Could Vary Asset Purchases

Wed, 20 Feb 2013 15:10:21 -0500

Minutes from the Federal Reserve's January policy meeting indicated the central bank's view that its policies are having a beneficial impact on one of the most crucial segments of the U.S. economy: housing.

The Easy Money Is Made, Dig Deeper For Bets On The Housing Recovery

Tue, 19 Feb 2013 12:55:54 -0500

In a January research note, Deutsche Bank economists dubbed 2013 the “Year Of The House,” and their optimistic view on the U.S. housing recovery should have come as no surprise to investors.

Can Housing-Related Shares Keep Rallying?

Wed, 26 Dec 2012 02:00:20 -0500

Can Housing-Related Shares Keep Rallying?

Wed, 26 Dec 2012 02:00:20 -0500

Supply-chain stocks linked to housing's recovery have surged in 2012. While the fundamentals remain intact, investors will need more discernment in 2013.

Federal Insider Trading Investigation Expands

Tue, 11 Dec 2012 11:37:14 -0500

The Wall Street Journal says that the SEC and federal prosecutors are looking at share trading by a number of CEOs.

Federal Insider Trading Investigation Expands

Tue, 11 Dec 2012 06:37:14 -0500

ETF Alternatives for Last Week’s Hot Stocks

Tue, 29 May 2012 11:46:38 -0400

ETF Alternatives for Last Week’s Hot Stocks

Tue, 29 May 2012 11:46:38 -0400

This week we look at luxury, retail, home improvement, banking and health care.

ETF Alternatives for Last Week’s Hot Stocks

Mon, 21 May 2012 09:52:50 -0400

ETF Alternatives for Last Week’s Hot Stocks

Mon, 21 May 2012 09:52:50 -0400

A look at IPOs, private equity, homebuilders, cars, hotels, REITs and refiners.

5 Durable Goods Stocks in Need of Repair

Tue, 18 Oct 2011 13:14:01 -0400

The boom times are over. With consumer spending low, people are cutting back, which means durable goods stocks are feeling the pinch at the register.