On January 8, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy). Improving housing market,
geographical expansion, product innovation, and operating
efficiencies are the rank drivers for this stock.
Why the Upgrade?
Mohawk Industries has been witnessing rising earnings
estimates on the back of housing market recovery in the U.S.
Moreover, this floor products supplier posted robust third
quarter 2012 results, including an earnings surprise of 1.96%.
The long-term expected earnings growth rate for this stock is
On November 1, Mohawk Industries reported third quarter
results with adjusted earnings of $1.04 per share surpassing the
year-ago earnings of 83 cents by 25%. Improvements in product
mix, pricing, volume and productivity boosted earnings in the
Net sales grew 2% year over year to $1.473 billion but lagged
the Zacks Consensus Estimate of $1.478 billion. The gain stemmed
from product innovations, acquisitions and operating
Following the third quarter beat, all the estimates were
revised upwards for both 2012 and 2013. The Zacks Consensus
Estimate for 2013 increased 2.1% over the last 60 days.
Besides, Mohawk has a strong financial position and therefore
looks for geographic expansion. With the acquisition announcement
of Pergo in October-end, the company expects to capture the most
recognized brand of premium laminate flooring in the U.S. and
Europe. The company has also announced its plans to acquire the
Marazzi Group, which will make Mohawk the worldwide leader in
ceramic tile. Marazzi Group has a significant presence in all its
major geographies, including Russia, the United States, Italy,
France and Spain.
The demand for new homes and improved sales of existing homes
in the U.S. provide a positive outlook for future flooring
growth. Moreover, the company is focusing on pricing to combat
raw material inflation. The company expects its fourth quarter
adjusted earnings in the range of 89 to 98 cents per share, up
from the fourth quarter earnings of 72 cents in the
Another Stock to Consider
Another stock in the sector,
)is worth considering, despite carrying a Zacks Rank #3
INTERFACE INC A (IFSIA): Free Stock Analysis
MOHAWK INDS INC (MHK): Free Stock Analysis
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