Mohawk to Report Q1 Earnings: What's in the Cards for the Stock?

Mohawk Industries, Inc. MHK is scheduled to report results for the first quarter of 2025 on May 1, after market close.

In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 3.7% but declined by a penny year over year. Net sales beat the consensus estimate by 2.8% and inched up 1% year over year.

MHK’s earnings surpassed expectations in each of the trailing four quarters, delivering an average surprise of 5.6%.

How Are Estimates Placed for Mohawk Stock?

The Zacks Consensus Estimate for Mohawk’s earnings per share (EPS) has decreased to $1.40 from $1.41 over the past seven days. The estimated figure indicates a decrease of 24.7% from the year-ago level. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The consensus estimate for net sales is pegged at $2.57 billion, indicating a 4.1% decrease from the year-earlier level.

Mohawk Industries, Inc. Price and EPS Surprise

Mohawk Industries, Inc. price-eps-surprise | Mohawk Industries, Inc. Quote

Factors That May Influence Mohawk’s Quarterly Results

Mohawk’s first quarter is likely to have reflected the ongoing macroeconomic and industry headwinds, with continued softness in demand due to elevated interest rates, low housing turnover, and a cautious consumer environment. These pressures are expected to have weighed on both sales volumes and pricing power in the to-be-reported quarter.

Our model expects first-quarter net sales in the Global Ceramic (which accounted for 38.2% of fourth-quarter 2024 net sales), Flooring North America (35.5%) and Flooring Rest of World (26.2%) segments to decline 5.8%, 4% and 2.4% to $984.6 million, $864.4 million and $717.1 million year over year, respectively.

Cost inflation remains a critical headwind, particularly in materials, labor, and energy. Though Mohawk is actively pursuing pricing actions in select categories and implementing cost reductions, management acknowledged that it will be difficult to fully offset rising costs through pricing alone. Moreover, currency headwinds from a stronger U.S. dollar are expected to affect international results by an estimated $7–$10 million in operating income. Seasonal dynamics will also weigh on performance, as the first quarter typically marks the slowest quarter of the year and will have two fewer shipping days compared with the year-ago period.

The Flooring North America segment implemented a new order management system, which had more issues than anticipated. A problematic rollout of a new order system led to shipment and invoicing delays. While manufacturing and financial systems remained unaffected, these issues are expected to reduce first-quarter operating income by $25–$30 million, with roughly $15–$20 million attributed to extraordinary costs and up to $50 million in lost sales. Management expects the bulk of the impact to be contained in the first quarter.

Despite these near-term challenges, Mohawk is leaning on strategic levers to support performance. Restructuring efforts across business units are expected to yield $100 million in incremental savings in 2025 and $285 million on a run-rate basis by 2026. Additionally, the company is introducing new, higher-margin products across its segments to improve mix and stimulate demand. These innovations, particularly in premium laminate, LVT, and quartz surfaces, are expected to provide long-term pricing and margin benefits.

We expect the adjusted gross margin to decline 110 bps year over year to 23.3%. The adjusted operating margin is expected to decrease to 4.8% from 6.1% reported a year ago.

What Our Model Unveils for Mohawk

Our proven model does not conclusively predict an earnings beat for Mohawk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as seen below.

Earnings ESP: MHK has an Earnings ESP of -0.28%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).

Stocks Poised to Beat on Earnings

Here are a few stocks from the Zacks Consumer Discretionary sector, which according to our model, have the right combination of elements to post an earnings beat this reporting cycle.

Hilton Grand Vacations Inc. HGV has an Earnings ESP of +3.59% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Hilton Grand Vacations is expected to register a 48.4% decline in earnings for the to-be-reported quarter. Its earnings missed the Zacks Consensus Estimate in three of the trailing four quarters and beat on one occasion. Hilton Grand Vacations’ average earnings miss by 15.2%.
 
Choice Hotels International, Inc. CHH currently has an Earnings ESP of +0.94% and a Zacks Rank of 3.
 
In the to-be-reported quarter, Choice Hotels’ earnings are expected to increase 10.2%. Choice Hotels’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 7.5%.
 
Flutter Entertainment plc FLUT currently has an Earnings ESP of +12.41% and a Zacks Rank of 3.
 
In the to-be-reported quarter, Flutter Entertainment’s earnings are expected to increase 1,380%. Flutter Entertainment’s earnings beat the Zacks Consensus Estimate in the preceding quarter by 88.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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