It's been a pretty great week for Mohawk Industries, Inc. (NYSE:MHK) shareholders, with its shares surging 11% to US$169 in the week since its latest annual results. The result was positive overall - although revenues of US$9.6b were in line with what the analysts predicted, Mohawk Industries surprised by delivering a statutory profit of US$7.22 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Mohawk Industries' ten analysts are now forecasting revenues of US$10.2b in 2021. This would be a satisfactory 6.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 47% to US$10.63. In the lead-up to this report, the analysts had been modelling revenues of US$9.98b and earnings per share (EPS) of US$10.21 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Mohawk Industries 6.3% to US$153on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Mohawk Industries analyst has a price target of US$180 per share, while the most pessimistic values it at US$105. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Mohawk Industries' growth to accelerate, with the forecast 6.8% growth ranking favourably alongside historical growth of 3.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.9% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, Mohawk Industries is expected to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mohawk Industries' earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Mohawk Industries going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Mohawk Industries that we have uncovered.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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