Stifel Nicolaus Praises Mohawk's Performance

New York, NY, Nov. 3, 2014 -- Analyst Stifel Nicolaus says it continues to recommend the stock of Mohawk Industries with a "buy" rating as Mohawk "continues to execute in a very impressive manner given the slower demand environment across the globe."

Stifel noted that while Mohawk's third quarter sales were weaker than expected at $1.99 billion, the $2.44 in adjusted earnings per share was a very good result given the revenue performance. Stifel said it is lowering its 2015 sales forecast "slightly" for Mohawk given the slowdown in various markets. However, it expects that Mohawk will still be able to improve its margins.

"Given competitors' challenges in many areas, we like Mohawk's position of physical assets and financial condition combined with its management's capabilities," Stifel said.

Mohawk carpet sales grew 1% on soft residential sales but higher commercial sales. Stifel noted that Mohawk sold more recycled, low price volume than in the past, although the high end products are reportedly still growing. Stifel also said that raw material costs in carpet have been stable and pricing has fully caught up to previous cost inflation.

"While we hope that the U.S. consumer shows some life heading into next year, there is no current signal of improvement," Stifel said.