Why Mohawk Industries Shares Jumped
Aug 2nd 2013 4:01PM
Updated Aug 2nd 2013 4:02PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Mohawk Industries were stampeding the market today, climbing as much as 11% after a strong second-quarter earnings report.
So what: The floor-covering specialist said sales jumped 34.4%, aided in part by acquisitions, to $1.98 billion, ahead of estimates of $1.96 billion, while EPS jumped to $1.84, easily clearing the bar set by analysts at $1.66. Organic sales improved 6% in the quarter with the rest of the gains coming from its purchase of Pergo, Marazzi, and Spano. Its outlook for the current quarter also outpaced Wall Street as Mohawk guided EPS between $1.81 and $1.91, compared to the analyst consensus at just $1.67.
Now what: I wouldn't expect too many repeat performances like this as much of the growth was driven mainly by acquisitions, however the improvement of 190 points in operating margin, due to cost controls, greater leverage and a change in sales mix, was impressive. The improving profitability also seems to indicate the successful integration of the acquired companies with Mohawk. As the world's largest flooring company, Mohawk would seem to have the economies have scale and the momentum to keep moving higher.
Tucked away in the unglamorous flooring industry, Mohawk has been flying under the raydar for years, more than tripling since 2011. But it's not the only stock Wall Street is too busy to notice. The Motley Fool's new free report highlights three less-than-luxurious stocks the 1% may be overlooking. Just click here to read it now.
The article Why Mohawk Industries Shares Jumped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.