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Mohawk Industries, Inc. (NYSE:MHK): Should The Recent Earnings Drop Worry You?

Simply Wall St

Examining Mohawk Industries, Inc.'s (NYSE:MHK) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MHK's latest performance announced on 31 December 2019 and compare these figures to its longer term trend and industry movements.

View our latest analysis for Mohawk Industries

Commentary On MHK's Past Performance

MHK's trailing twelve-month earnings (from 31 December 2019) of US$744m has declined by -13% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 6.9%, indicating the rate at which MHK is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the entire industry is feeling the heat.

NYSE:MHK Income Statement April 29th 2020

In terms of returns from investment, Mohawk Industries has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. Furthermore, its return on assets (ROA) of 5.9% is below the US Consumer Durables industry of 7.6%, indicating Mohawk Industries's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Mohawk Industries’s debt level, has declined over the past 3 years from 17% to 8.7%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Mohawk Industries to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for MHK’s future growth? Take a look at our free research report of analyst consensus for MHK’s outlook.
  2. Financial Health: Are MHK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.