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Moody’s Upgrades Mohawk Industries’s Notes to ‘Baa1’

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Jan. 17 2017, Updated 4:36 p.m. ET

Price movement

Mohawk Industries (MHK) fell 0.99% to close at $202.41 per share during the second week of January 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.99%, 0.57%, and 1.4%, respectively, on January 13.

MHK is trading 0.17% above its 20-day moving average, 2.0% above its 50-day moving average, and 1.7% above its 200-day moving average.

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Related ETF and peers

The Vanguard Large-Cap ETF (VV) invests 0.06% of its holdings in Mohawk Industries. The YTD price movement of VV was 1.6% on January 13.

The market caps of Mohawk Industries’s competitors are as follows:

  • Armstrong World Industries (AWI) — $2.2 billion
  • James Hardie Industries-ADR (JHX) — $7.1 billion
  • Berkshire Hathaway (BRK.A) — $397.7 billion

Latest news on MHK

In a press release on January 11, 2017, Moody’s reported, “Moody’s Investors Service today upgraded Mohawk Industries, Inc.’s (“Mohawk”) senior unsecured rating to Baa1 from Baa2. This action is due to the company’s strong operating performance and credit metrics and Moody’s expectation that Mohawk’s credit profile will remain strong even in a reasonable economic downturn. The rating outlook is stable.”

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Mohawk’s performance in fiscal 3Q16

Mohawk Industries (MHK) reported fiscal 3Q16 net sales of ~$2.3 billion—a rise of 6.5%, compared to net sales of ~$2.2 billion in fiscal 3Q15. Sales from Global Ceramic, Flooring North America, and Flooring Rest of the World segments rose 3.9%, 5.6%, and 14.7%, respectively, in fiscal 3Q16 compared to fiscal 3Q15.

The company’s gross profit margin and operating margin rose 90 basis points and 310 basis points, respectively, in fiscal 3Q16 over fiscal 3Q15.

Its net income and EPS (earnings per share) rose to $269.9 million and $3.62, respectively, in fiscal 3Q16, compared to $214.9 million and $2.89, respectively, in fiscal 3Q15. It reported adjusted EPS of $3.50 in fiscal 3Q16, a rise of 17.5% over fiscal 3Q15.

Mohawk Industries’s cash and cash equivalents and inventories rose 1.3% and 3.2%, respectively, in fiscal 3Q16 compared to fiscal 3Q15. Its current ratio rose to 1.2x, and its debt-to-equity ratio fell to 0.83x in fiscal 3Q16, compared to a current ratio and a debt-to-equity ratio of 1.0x and 1.1x, respectively, in fiscal 3Q15.

The company has projected EPS (earnings per share) in the range of $3.16–$3.25 per share, which excludes any restructuring charges, for fiscal 4Q16.

Next, we’ll look at Sonoco Products (SON).

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