Simple Concepts Research Group

How To Assess Mohawk Industries (NYSE: MHK) Amid Losses

by | Mar 7, 2022 | 52 Week Lows, Stock Picks

mohawk industries mhk stock valuation

Mohawk Industries (MHK) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Mohawk Industries (MHK) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Mohawk Industries Fundamentals

MHK Stock Rating

Stock Price Target: $192.16

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Mohawk Industries in comparison to the Home Furnishing industry and the S&P 500.

Mohawk Industries is a Mid Cap company with a Market Cap of $9.10B.

How are investors using Mohawk Industries earnings yield to assess the company?

Mohawk Industries (MHK)_ Earnings Yield in Comparison to the Home Furnishing Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Mohawk Industries is 14.03%, in comparison to 4.05% for the S&P 500 and 1.74% for the 10-year treasury bond. The median earnings yield for the Home Furnishing industry is 12.38%.

What does Mohawk Industries Price-to-Earnings Ratio (P/E) tell investors about the company?

Mohawk Industries (MHK)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Home Furnishing Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Mohawk Industries is currently trading at a P/E of 9.37. The P/E for the Home Furnishing industry is 9.39 and the P/E for the S&P 500 is 24.68.

What is the current Price-to-Sales Ratio (P/S) for Mohawk Industries?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Mohawk Industries is currently trading at a P/S of 0.86. The P/S for the Home Furnishing industry is 1.05 and the P/S for the S&P 500 is 2.86.

How does Mohawk Industries Price-to-BookRatio (P/B) compare to the Home Furnishing industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Mohawk Industries P/B ratio is 1.08. The P/B for the Home Furnishings industry is 2.86 and the P/B for the S&P 500 is 4.40.

How attractive is Mohawk Industries Return on Invested Capital (ROIC) to investors?

Mohawk Industries (MHK)_ Return on Invested Capital in Comparison to the Home Furnishing Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Mohawk Industries ROIC is currently 9.59% in comparison to 13.67% for the Home Furnishings industry and 9.10% for the S&P 500.

Mohawk Industries (MHK)_ Price Target & 52-Week Price Range

How has MHK stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Mohawk Industries has traded between the range of $131.86 and $231.80.

The current Analyst Price Target for Mohawk Industries is $192.16.

What is Mohawk Industries YOY Performance in comparison to its industry and the total market?

The YOY performance for Mohawk Industries is -26.20%. The Home Furnishings industry has a YOY performance of -0.97% in comparison to the YOY S&P 500 performance of 11.85%.

Mohawk Industires (MHK)_ YOY Performance in Comparison to the Home Furnishing Industry and the S&P 500

Recent Financial Results (Q4, 2021)

  • 2021 fourth quarter net earnings of $189M and diluted earnings per share (EPS) of $2.80
  • Adjusted net earnings were $199M, and EPS was $2.95, excluding restructuring, acquisition, and other charges
  • Net sales for the fourth quarter of 2021 were $2.8B, an increase of 4.5%
  • For the fourth quarter of 2020, net sales were $2.6B, net earnings were $248M and EPS was $3.49
  • Adjusted net earnings were $252M, and EPS was $3.54, excluding restructuring, acquisition, and other charges
  • For the twelve months ending December 31, 2021, net earnings and EPS were $1.03B and $14.9M

Stock Price Target: $192.16

Company Overview

MHK Stock Rating

Mohawk Industries, Inc. designs, manufactures, sources, distributes, and markets flooring products for remodeling and new constructions of residential and commercial spaces in the United States, Europe, Russia, and internationally. It operates through three segments: Global Ceramic, Flooring North America (Flooring NA), and Flooring Rest of the World (Flooring ROW).

Mohawk Industries, Inc. was incorporated in 1988 and is headquartered in Calhoun, Georgia. The current CEO is Jeffrey Lorberbaum.

Be sure to add Mohawk Industries (MHK) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.