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MHK STOCK WRITE UP


MHK (MOHAWK INDUSTRIES)

  • P/E: 18.6
  • GAAP DILUTED EPS Y-O-Y GROWTH LAST QUARTER: $.44
  • SECTOR: CONSUMER DURABLES
  • ASSETS-LIABILITIES: 2.312
  • DIVIDEND: none

Mohawk industries is a stock you probably have not heard of, unless you are a DIY enthusiast or work in homebuilding. Mohawk is a supplier of carpet, wall tiles, and laminate. They have posted consistent revenue increases over the last 5 years.
In 2016, the company spent a record amount on capital investing in order to continue the growth of its business, and plans to expand on that strategy in 2017. The company is dedicating itself to expansion of manufacturing capacity and development of new products, rather than acquisitions. This capital expenditure has not slowed the company's growth, however, as its operating income margin has also increased over the last 5 years. Jeffrey Lorberbaum, the company's CEO, is the son of the owners of a flooring company which was acquired by Mohawk. Lorberbaum has risen through the company's ranks, and has increased the company's revenue since he assumed leadership in 2001.
As a supplier of flooring to homebuilders, Mohawk's success is largely a function of strength in the housing market. According to CNBC, homebuilder sentiment reached its highest level since June 2005 in March 2017. They reported that sentiment had cooled in April 2017, but not to the degree expected. Analyst coverage of the stock has been generally positive, with recommendations near a composite score of “strong buy”, and an absence of “sell” ratings.
The company has a solid growth rate in both revenue and expansion of operating margin. Its trailing price-to-earnings multiple is below 20, and the company has risen only 16.43% on the year versus the climb to record levels of confidence in the closely correlated housing market, signifying that the company is not overvalued and the share price has room to grow with earnings if the trend continues. Mohawk has a track record of increasing revenue with investments, and has a positive history of debt reduction and a positive assets-liabilities ratio with which to invest. Overall, the company is positioned in a strong history, with a strong track record, and presents a low risk factor according to CML news.








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