New York, NY, Aug. 5, 2013 -- Analyst Stifel Nicolaus is maintaining its "buy" rating on Mohawk Industries and raising its earnings estimate after the company's latest quarterly filing.
"Mohawk showed its powerful leverage to higher volumes, improving mix, and acquisition synergies in its second quarter," the firm said.
"Margins should strengthen from here as all three of these issues continue to accrue for what we think will be at least the next two years. Volumes are improving in North America, mix is improving in ceramic and carpet, and the three acquisitions are early in their stages of transition with the goal of 200-400 basis points of total leverage in "a few years" on the base of almost $1.6 billion in revenues."
The firm noted that carpet revenues are growing again as residential construction, residential replacement, and commercial all showed growth. Even rugs, which have been a drag in recent quarters, showed some growth.
Stifel increased its earnings estimate to from $5.75 to $6.21 this year and from $6.86 to $7.37 next year.