By Angela Palumbo
Mohawk Industries stock was falling sharply on Friday after the flooring company provided a disappointing earnings forecast as consumer spending in the space remains challenged.
Mohawk Chief Executive Jeff Lorberbaum said in a press release late Thursday that the company expects fourth-quarter adjusted earnings of between $1.77 and $1.87 a share, well below Wall Street estimates of $2.25 a share.
"Global conflicts, political uncertainty and inflation are weighing on consumer confidence and discretionary spending around the world," Lorberbaum said. "Short-term macroeconomic conditions remain unpredictable, and we do not anticipate an industry improvement this year."
It wasn't all bad news, though. Mohawk posted third-quarter adjusted earnings of $2.90 a share on revenue of $2.72 billion. Analysts surveyed by FactSet were expecting earnings of $2.89 a share on revenue of $2.7 billion.
The company also said that it expects that as the Federal Reserve continues to cut interest rates, the housing market will strengthen and lead to increased flooring sales.
"MHK reported results about as expected, with the first positive revenue gain in North America in two years," Truist Securities analyst Keith Hughes wrote in a note. "Regardless, the weaker-than-Street guidance will pressure the stock as we believe this will come as a surprise to most investors."
Hughes rates the stock a Buy with a price target of $184.
Shares of Mohawk were falling 11% to $134.73 and were on pace for their largest daily percentage decrease since July 9, 2020, according to Dow Jones Market Data. The stock, which was the worst performer in the S&P 500 on Friday, remains up 30% this year compared to the 23% increase of the index.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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October 25, 2024 11:14 ET (15:14 GMT)
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