Stay Away From Mohawk Industries, Inc. (MHK)] – Part II
Mohawk Industries Inc. announced disappointed third-quarter 2018 results last week. Mohawk's reported quarterly sales of $2.55 billion and $3.29 per share, but analysts were expecting sales of $2.6 billion or $3.58 per share.
Mohawk chairman and CEO Jeffrey Lorberbaum results fell short of expectations due to lower sales growth, transportation cost due to higher fuel prices and raw material cost.
I wrote about Mohawk Industries two months ago.
Mohawk Industries announced their last quarterly earnings results on July 25th. The company reported $3.51 earnings per share for the quarter, missing the consensus estimate of $3.90.
Mohawk CEO Jeffrey Lorberbaum promised to improve performance by raising prices and expanding into both new products and new markets to help grow sales. However, he gave no new guidance to reassure investors that things would improve sooner than later.
Overall, I'm bearish on the housing market. I think as interest rates increase, borrowing cost is going to increase, pricing out many potential home buyers. Also, as inflation outpaces wage growth, it's going to make buying a home less affordable.
Price never pulled back to the monthly supply, but did hit the monthly demand and is bouncing off that monthly demand now. However, I think there is more downside in Mohawk, due to the further deterioration in the Housing Market.
There is another monthly demand below.
So if the monthly demand at $107 gets breached and price pulls back to the weekly supply at $151, the chart suggests price will head down to the next monthly demand at $75.
However, another trade set-up to watch for is basing within the monthly demand zone at $107, followed by a breakout and a retest to take price down to the next monthly demand zone at $75.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
