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Mohawk Industries, Inc.’s (MHK - Free Report) adjusted earnings of $3.26 per share beat the Zacks Consensus Estimate of $3.22 by 1.2%. Adjusted earnings exclude restructuring, acquisition and other charges. Earnings also increased 16% year over year backed by strong operating margins.
Earnings in full-year 2016 were $12.61 per share, reflecting an increase of 23.6% from the year-ago profit level of $10.20.
Total revenue of $2,182.6 million surpassed the Zacks Consensus Estimate of $2,146 million by 1.7%. Revenues also increased 9.2% year over year on higher sales across all the segments.
Full-year 2016 revenues came in at $8.96 billion, compared with $8.07 billion a year ago, reflecting an 11% increase.
Adjusted gross profit (excluding acquisition impact) of $695.6 million increased 9% year over year.
Adjusted selling, general and administrative (SG&A) expenses were up 5.9% to $381.7 million from the prior-year quarter.
Adjusted operating income at a constant exchange rate increased 17.7% to $326.6 million. Adjusted operating margin grew 110 basis points (bps) to 15%, mainly because of higher sales volume and productivity.
Segment Details
Global Ceramic: Net sales at this segment amounted to $749.1 million, up 5.3% year over year on a constant days and constant currency basis. The North American ceramic business gained traction during the quarter. New home construction, home center and the commercial sector outperformed. Internationally, Mexico is noteworthy.
Flooring North America: Net sales at this segment totaled $970.1 million, up 10% year over year. On a constant days basis, sales improved 8.5% driven by strong residential carpet sales despite lower selling prices from channel mix and growth in polyester.
Flooring Rest of the World: Net sales at this segment increased 14% year over year to $463.3 million. On a constant currency basis, sales improved 7% on solid sales of LVT, laminate and insulation products.
2017 Guidance
The company anticipates strong sales growth in 2017, with a slight improvement in operating margins (excluding acquisitions and intellectual property). Meanwhile, Mohawk Industries will absorb approximately $45 million in start-up manufacturing and related marketing expenses this year along with other cost inflation.
In order to achieve long-term growth, the company is expanding its differentiated product line and working on the capacity and efficiency of its operations.
Mohawk Industries is also introducing distinctive collections to boost sales. It is aggressively implementing productivity improvements across all businesses and bringing new capacity online to support growth.
The company is currently exploring numerous investment options to ramp up expansion, including green field opportunities and acquisitions.
Taking these factors into account, the EPS guidance for the first quarter is at $2.64 to $2.73, which represents a 11% to 15% increase year over year.
Better-ranked stocks in the broader consumer discretionary sector include Cedar Fair, L.P. (FUN - Free Report) , Manchester United Ltd. (MANU - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) , all carrying a Zacks Rank #2 (Buy).
Cedar Fair has a VGM style score of “A”.
Manchester United has a solid earnings surprise history. The company delivered positive earnings surprises in three of the past four quarters, the average being 61.16%.
Royal Caribbean’s earnings are expected to increase 15.1% in the current year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
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Mohawk Industries (MHK) Tops Q4 Earnings; Issues Q1 View
Mohawk Industries, Inc.’s (MHK - Free Report) adjusted earnings of $3.26 per share beat the Zacks Consensus Estimate of $3.22 by 1.2%. Adjusted earnings exclude restructuring, acquisition and other charges. Earnings also increased 16% year over year backed by strong operating margins.
Earnings in full-year 2016 were $12.61 per share, reflecting an increase of 23.6% from the year-ago profit level of $10.20.
Total revenue of $2,182.6 million surpassed the Zacks Consensus Estimate of $2,146 million by 1.7%. Revenues also increased 9.2% year over year on higher sales across all the segments.
Full-year 2016 revenues came in at $8.96 billion, compared with $8.07 billion a year ago, reflecting an 11% increase.
Operating Highlights
Adjusted gross profit (excluding acquisition impact) of $695.6 million increased 9% year over year.
Adjusted selling, general and administrative (SG&A) expenses were up 5.9% to $381.7 million from the prior-year quarter.
Adjusted operating income at a constant exchange rate increased 17.7% to $326.6 million. Adjusted operating margin grew 110 basis points (bps) to 15%, mainly because of higher sales volume and productivity.
Segment Details
Global Ceramic: Net sales at this segment amounted to $749.1 million, up 5.3% year over year on a constant days and constant currency basis. The North American ceramic business gained traction during the quarter. New home construction, home center and the commercial sector outperformed. Internationally, Mexico is noteworthy.
Flooring North America: Net sales at this segment totaled $970.1 million, up 10% year over year. On a constant days basis, sales improved 8.5% driven by strong residential carpet sales despite lower selling prices from channel mix and growth in polyester.
Flooring Rest of the World: Net sales at this segment increased 14% year over year to $463.3 million. On a constant currency basis, sales improved 7% on solid sales of LVT, laminate and insulation products.
2017 Guidance
The company anticipates strong sales growth in 2017, with a slight improvement in operating margins (excluding acquisitions and intellectual property). Meanwhile, Mohawk Industries will absorb approximately $45 million in start-up manufacturing and related marketing expenses this year along with other cost inflation.
In order to achieve long-term growth, the company is expanding its differentiated product line and working on the capacity and efficiency of its operations.
Mohawk Industries is also introducing distinctive collections to boost sales. It is aggressively implementing productivity improvements across all businesses and bringing new capacity online to support growth.
The company is currently exploring numerous investment options to ramp up expansion, including green field opportunities and acquisitions.
Taking these factors into account, the EPS guidance for the first quarter is at $2.64 to $2.73, which represents a 11% to 15% increase year over year.
Mohawk Industries carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Sector Picks
Better-ranked stocks in the broader consumer discretionary sector include Cedar Fair, L.P. (FUN - Free Report) , Manchester United Ltd. (MANU - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) , all carrying a Zacks Rank #2 (Buy).
Cedar Fair has a VGM style score of “A”.
Manchester United has a solid earnings surprise history. The company delivered positive earnings surprises in three of the past four quarters, the average being 61.16%.
Royal Caribbean’s earnings are expected to increase 15.1% in the current year.
Mohawk Industries, Inc. Price, Consensus and EPS Surprise
Mohawk Industries, Inc. Price, Consensus and EPS Surprise | Mohawk Industries, Inc. Quote
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>