What Happened?

Shares of flooring manufacturer Mohawk Industries (NYSE:MHK) fell 11.4% in the morning session after the company reported underwhelming third-quarter earnings results. While the quarter's results were largely in line, guidance was well below, with management citing factors such as consumer confidence, inflation, and the recent hurricanes in the US. Overall, this was a softer quarter. MHK wasn't the only housing-related company to report underwhelming results. CSL, which is also exposed to residential construction and demand for homes, also put up weak results that sent the stock down

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Mohawk Industries? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Mohawk Industries’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for Mohawk Industries and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 19% on the news that the company reported second quarter earnings results. Both adjusted EBITDA and EPS beat in the quarter, showing that profitability is strong. Mohawk Industries provided an optimistic earnings forecast for the next quarter, which exceeded analysts' expectations. Despite a challenging market environment driven by higher interest rates and consumers' deferral of home remodeling and improvement projects, the market seemed to be cheering the company's restructuring actions.  Overall, this was a really good quarter that should please shareholders.

Mohawk Industries is up 27.9% since the beginning of the year, but at $134.68 per share, it is still trading 17.2% below its 52-week high of $162.70 from July 2024. Investors who bought $1,000 worth of Mohawk Industries’s shares 5 years ago would now be looking at an investment worth $934.42.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.