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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