Why Mohawk Industries (MHK) Shares Are Plunging Today

What Happened?

Shares of flooring manufacturer Mohawk Industries (NYSE:MHK) fell 7.1% in the afternoon session after the company reported third-quarter results and issued a weak fourth-quarter profit forecast that fell short of expectations. While Mohawk's third-quarter revenue increased 1.4% year on year to $2.76 billion, beating analyst expectations, its adjusted earnings per share of $2.67 fell from $2.90 in the same period a year earlier. However, the primary driver for the stock's decline was its guidance for the upcoming quarter. Mohawk projected fourth-quarter adjusted earnings per share between $1.90 and $2.00, with the midpoint of $1.95 falling below analyst estimates of $2.13. Management attributed the softer projection to expectations that market volumes would remain weak, pointing to ongoing challenges in the home furnishings market.

The shares closed the day at $119.89, down 7% from previous close.

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What Is The Market Telling Us

Mohawk Industries’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock dropped 11.4% on the news that the company reported underwhelming third-quarter earnings results. While the quarter's results were largely in line, guidance was well below, with management citing factors such as consumer confidence, inflation, and the recent hurricanes in the US. Overall, this was a softer quarter. MHK wasn't the only housing-related company to report underwhelming results. CSL, which is also exposed to residential construction and demand for homes, also put up weak results that sent the stock down.

Mohawk Industries is up 3.4% since the beginning of the year, but at $119.90 per share, it is still trading 21.1% below its 52-week high of $151.87 from October 2024. Investors who bought $1,000 worth of Mohawk Industries’s shares 5 years ago would now be looking at an investment worth $1,207.

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