Yahoo Finance Mohawk (MHK) to Report Q4 Earnings: Factors to Consider
Mohawk Industries, Inc. MHK is scheduled to report fourth-quarter 2022 results on Feb 9, after market close.
In the last reported quarter, the company’s adjusted earnings met the Zacks Consensus Estimate and declined 15.4% year over year. Net sales lagged the consensus estimate by 4.6% but increased 3.6% from the year-ago quarter.
MHK’s earnings surpassed expectations in nine of the trailing 10 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for Mohawk’s fourth-quarter earnings is pegged at $1.29 per share, indicating a 56.3% decline from the prior-year reported figure of $2.95. The consensus estimate for net sales is pegged at $2.73 billion, suggesting a 1% decrease from the year-ago reported figure of $2.76 billion.
Mohawk Industries, Inc. Price and EPS Surprise
Mohawk Industries, Inc. price-eps-surprise | Mohawk Industries, Inc. Quote
Factors to Note
Mohawk’s sales in fourth-quarter 2022 are expected to have slowed down, owing to softness in the housing industry and remodeling activities. Higher interest rates and inflationary pressure have been moderating demand for homes, impacting consumer discretionary spending. Also, residential remodeling is softening as consumers have been deferring their home improvement projects.
In Europe, dramatically variable natural gas prices and constrained supply are reducing economic growth. Mohawk has been witnessing inflation in most product categories. Also, the availability of material, labor and transportation has been challenging, thereby inflating costs. Especially tight chemical supplies are hurting the output of LVT, carpet, laminate and board panels. These inflationary pressures are likely to significantly weigh on fourth-quarter bottom line results.
MHK expects fourth-quarter adjusted earnings (excluding restructuring charges) in the range of $1.40-$1.50 per share. We expect adjusted earnings to decrease 56.4% year over year to $1.29 per share.
For the to-be-reported quarter, we expect Global Ceramic revenues to increase 0.5%. Flooring NA revenues is likely to decline 5.7% and Flooring ROW is expected to be down 7.3% year over year.
The consensus mark for revenues from the Global Ceramic unit is pegged at $1,013 million, implying a 6.6% year-over-year increase. The consensus estimate for the Flooring NA segment’s net sales is pegged at $1,006 million, indicating a decrease of 1% from the year-ago reported figure. The consensus mark for revenues from Flooring ROW is pegged at $738 million, suggesting a 7.3% decline from the year-ago quarter.
The consensus mark for Global Ceramic, Flooring NA and Flooring ROW businesses’ adjusted operating income suggests a decline of 10%, 65.1% and 54.4%, respectively, from a year ago period.
That said, Mohawk has undertaken certain actions across the enterprise to reduce costs. In Flooring NA, it has rationalized some older, less efficient fiber assets and reduced rug manufacturing capacity. In Flooring ROW, it is consolidating insulation products and streamlining organization. In Ceramic Europe, it is simplifying the administrative and manufacturing organizations. These actions are likely to have benefited the company in the to-be-reported quarter.
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, that is not the case here as you will see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, MHK has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some stocks from the Zacks Consumer Discretionary sector that investors may consider as our model shows that they have the right combination of elements to post an earnings beat for the to-be-reported quarter:
MGM Resorts International MGM has an Earnings ESP of +8.41% and a Zacks Rank #3.
MGM’s earnings topped the consensus mark in two the last four quarters and missed the same in the other two, with the average earnings surprise being negative 52.1%. Earnings for the to-be-reported quarter are expected to fall 1,433.3% year over year.
iQIYI, Inc. IQ has an Earnings ESP of +20.00% and a Zacks Rank #2.
IQ’s earnings topped the consensus mark in three of the last four quarters and missed the same in the other one, with the average negative surprise being 9%. Earnings for the to-be-reported quarter are expected to increase 125% year over year.
Red Rock Resorts, Inc. RRR has an Earnings ESP of +6.43% and a Zacks Rank #3.
RRR’s earnings topped the consensus mark in all the last four quarters, with the average earnings surprise being 66.7%. Earnings for the to-be-reported quarter are likely to grow 1.8% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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