Mohawk (MHK) Gears Up to Release Q3 Earnings: What to Expect
Mohawk Industries, Inc. MHK is scheduled to report third-quarter 2021 results on Oct 28, after market close.
In the last reported quarter, the company’s adjusted earnings and net sales topped the Zacks Consensus Estimate by 20% and 6.8%, respectively. Also, on a year-over-year basis, the metrics improved a whopping 1,103% and 44%, respectively.
Trend in Estimate Revision
The Zacks Consensus Estimate for Mohawk’s third-quarter earnings is pegged at $3.94 per share, indicating a 20.9% increase from the prior-year reported figure of $3.26. The consensus estimate for net sales is pegged at $2.95 billion, suggesting a 14.4% increase from the year-ago reported figure.
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. price-eps-surprise | Mohawk Industries, Inc. Quote
Factors to Note
The company is expected to have registered improved sales and strong order backlog across the enterprise during the third quarter owing to robust demand trends. Government stimulus, low interest rates, new home construction and robust residential remodeling are likely to have benefited its performance in the to-be-reported quarter.
Owing to higher market demand and increased sales in residential remodeling and new construction markets, Mohawk's U.S. ceramic business has been witnessing improved customer traffic. The company expects expansion of ceramic capacities in the third quarter and beyond. The consensus mark for revenues from the Global Ceramic unit is pegged at $1,007 million, implying a 10.5% year-over-year increase.
The Flooring NA business has also been seeing strong growth in the residential channel. Its commercial channel has been recovering and seeing more investments in new projects. The consensus estimate for the Flooring NA segment’s net sales is pegged at $1,147 million, indicating an improvement of 16.8% from the year-ago reported figure.
Within Flooring ROW, the company has been witnessing strong demand in most categories and geographies. Especially, the insulation business has been experiencing strong demand backed by government incentives for energy savings. The consensus mark for revenues from Flooring ROW is pegged at $812 million, suggesting a 19.2% improvement from the year-ago quarter.
Yet, Mohawk has been witnessing inflation in most of the product categories and higher material, labor and transportation costs, thereby raising prices. Also, the Global Ceramic and Flooring Rest of the World segments might have observed reduced production and increased costs due to their scheduled European vacation. Nonetheless, selective price increase and cost-saving initiatives might have offset the increased costs to some extent.
Coming to bottom-line projections, the consensus mark for adjusted operating income from Global Ceramic is $123 million, indicating 30.9% growth from a year ago. The same for Flooring NA units is pegged at $116 million, suggesting a 45% rise from the prior year. The consensus estimate for Flooring ROW business’ operating income is $139 million, which suggests a 6.1% improvement from $131 million a year ago.
During the second-quarter earnings call, management stated that it expects third-quarter adjusted earnings (excluding restructuring charges) in the range of $3.71-$3.81 per share, indicating an improvement from the year-ago reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Mohawk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, it has a Zacks Rank #2 and an Earnings ESP of -0.51%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Worth a Look
Here are some companies in the Zacks Consumer Discretionary sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Choice Hotels International, Inc. CHH has an Earnings ESP of +4.04% and holds a Zacks Rank #2.
MGM Resorts International MGM has an Earnings ESP of +172.22% and a Zacks Rank #3.
Hyatt Hotels Corporation H has an Earnings ESP of +5.80% and a Zacks Rank #3.
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Mohawk Industries, Inc. (MHK) : Free Stock Analysis Report
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