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Mohawk Industries (MHK) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Analyze Mohawk Industries (MHK) Piotroski F-Score for 2023, highlighting key financial metrics. Get insights on profitability, liquidity, and operating efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Mohawk Industries (MHK) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score for Mohawk Industries (MHK) is 4 out of 9, indicating a mediocre financial standing. The company's profitability appears weak, given its negative net income and declining ROA. However, it does show strengths in maintaining positive cash flow from operations and decreasing leverage. Its liquidity has slightly decreased, as noted in the drop in the current ratio. Operational inefficiencies are highlighted by declining gross margins and asset turnover ratios.

Insights for Value Investors Seeking Stable Income

Given Mohawk Industries' mediocre Piotroski score of 4, which is below the midpoint of 5. This suggests some financial weaknesses, particularly in profitability and operational efficiency. However, improvements in cash flow and leverage are positive signs. Potential investors may consider monitoring the company’s future performance for signs of recovery and better operational efficiency before making significant investment decisions. It may be worth conducting further research or waiting for clearer improvements in the financial metrics before investing.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Mohawk Industries (MHK)

Company has a positive net income?

Net income indicates a company's profitability over a specific period.

Historical Net Income of Mohawk Industries (MHK)

In 2023, Mohawk Industries (MHK) reported a net income of -$439,516,000, marking a negative trend. Historically, the company's net income has fluctuated, highlighted by significant downturns, such as in 2008 (-$1,458,228,000) and in 2009 (-$5,499,000). However, Mohawk showed periods of profitability with a noticeable peak of $1,033,159,000 in 2021. The recent negative net income suggests financial challenges for the company. Thus, under the Piotroski analysis, Mohawk receives 0 points for net income in 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses the amount of cash that a company’s regular business activities generate. Positive CFO is vital as it indicates the company is generating sufficient cash from its core activities to sustain and grow its operations.

Historical Operating Cash Flow of Mohawk Industries (MHK)

Mohawk Industries (MHK) posted a Cash Flow from Operations (CFO) of $1,329,229,000 in 2023. This figure is positive, adding 1 point to its Piotroski score. Analyzing the previous 20 years, the company's CFO has consistently demonstrated upward momentum, barring a few fluctuations. Mohawk's ability to maintain positive CFO figures despite economic cycles and industry challenges is indicative of robust operational management and financial health.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) illustrates how efficiently a company is using its assets to generate profit. A higher ROA reflects better management and operational efficiency.

Historical change in Return on Assets (ROA) of Mohawk Industries (MHK)

For Mohawk Industries (MHK), the ROA in 2023 was -0.0318 compared to 0.0018 in 2022, showing a decrease. Consequently, the score for this criterion is 0. This negative trend indicates that the company has become less efficient at generating profit from its assets over the past year. Historical data over the last 20 years depicts fluctuating ROA values and the industry median ROA consistently remaining above 0.27, highlighting the need for Mohawk Industries to bolster its operational efficiency to stay competitive.

Operating Cashflow are higher than Netincome?

Comparing operating cash flow to net income helps determine if a company can generate sufficient cash from its core operations to cover its net income. A positive trend is a good sign for sustainability.

Historical accruals of Mohawk Industries (MHK)

For 2023, Mohawk Industries reports an operating cash flow of $1,329,229,000 compared to a net income of -$439,516,000. This means that the operating cash flow is significantly higher than the net income, scoring +1 point for this criterion. Historically, Mohawk's operating cash flow has been consistently positive, ranging from $309,390,000 in 2003 to $1,769,839,000 in 2020, indicating strong operational performance over the years. Even during net income dips such as 2022's $25,247,000 and 2023's significant loss, operating cash flow remains robust, reaffirming the company's efficient cash generation capabilities despite fluctuations in profitability. This strong operational cash flow generation amidst net income deficits suggests a potential for recovery and sustained business operations. Moreover, zero or positive accruals over the years further reflect sound financial practices. A higher operating cash flow over net income showcases that the company can effectively manage its working capital and operational inefficiencies, critical factors for long-term financial health.

Liquidity of Mohawk Industries (MHK)

Leverage is declining?

Change in leverage over time is a key measure of a firm's financial risk. Lower leverage implies reduced risk and stronger financial health.

Historical leverage of Mohawk Industries (MHK)

Comparing the leverage ratios, Mohawk Industries (MHK) had a leverage of 0.1611 in 2022 and 0.1504 in 2023. This indicates a decrease in leverage in 2023. Interestingly, over the past 20 years, leverage peaked at 0.3997 in 2005 but has generally trended downwards, dipping to its lowest in 2016 at 0.1103. The recent decline to 0.1504 further strengthens the firm's financial standing by reducing its financial risk. This trend is favorable and earns 1 point in the Piotroski analysis.

Current Ratio is growing?

The current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It indicates financial health.

Historical Current Ratio of Mohawk Industries (MHK)

The current ratio of Mohawk Industries has decreased from 1.92 in 2022 to 1.7814 in 2023. Although a ratio above 1 suggests that the company can cover its short-term liabilities, the drop suggests a slight weakening in liquidity. Over the last 20 years, Mohawk Industries' current ratio peaked in 2012 at 3.0774 and hit a low in 2015 at 0.9972. Relative to the industry median, Mohawk's current ratio in 2023 is slightly below the industry median of 1.7959. This might raise concerns among investors regarding the firm's short-term financial health but remains within a relatively stable range.

Number of shares not diluted?

The change in shares outstanding examines whether a company repurchases shares, which is often perceived as a positive signal as it can indicate the company's belief in its undervaluation.

Historical outstanding shares of Mohawk Industries (MHK)

In 2023, the outstanding shares for Mohawk Industries (MHK) increased slightly to 63,657,000 from 63,826,000 in 2022. This indicates a decrease of 169,000 shares. Over the past 20 years, the trend has shown fluctuations but a general reduction in shares, which could be a signal of the company's intention to enhance shareholder value. However, given that the outstanding shares decreased in 2023, this criterion would add 1 point to the Piotroski F-Score. Thus, for 2023, this is a positive trend concerning the Piotroski Analysis.

Operating of Mohawk Industries (MHK)

Cross Margin is growing?

Gross Margin measures a company's financial health by revealing the portion of money left over from revenues after accounting for the cost of goods sold (COGS). It serves as crucial indicator of operational efficiency.

Historical gross margin of Mohawk Industries (MHK)

The Gross Margin for Mohawk Industries has decreased from 0.2508 in 2022 to 0.2433 in 2023. This marks a decline and subsequently translates to scoring 0 points for this criterion. When comparing the company's gross margin to the industry median, which stands at 0.3496 in 2023, there's a more noticeable gap, emphasizing the company's challenges. Historical data shows a varied journey with peaks, notably in 2016 at 0.314 and troughs like 0.2306 in 2009. A consistently declining margin over the recent years calls for an introspection into their cost-control and pricing strategies. Overall, the declining trend in the Gross Margin from 2022 to 2023 spells concern.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures the efficiency with which a company uses its assets to generate sales. Improvement indicates better asset utilization.

Historical asset turnover ratio of Mohawk Industries (MHK)

Comparing the Asset Turnover of 0.8046 in 2023 with 0.8282 in 2022, we see a decrease, resulting in 0 points. Historical data highlights fluctuations: values peaked in 2004 at 1.3728 and trended down till 2020, recovering slightly since.


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