MOHAWK INDUSTRIES INC (MHK): what the price assumes
In the published model solve dated 2026-Q2, anchored at $135.69, MOHAWK INDUSTRIES INC (MHK) is priced for +13.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MHK
Headline
| Field | Value |
|---|---|
| Ticker | MHK |
| Company | MOHAWK INDUSTRIES INC |
| Current price | $135.69/sh |
| Composition | Ceramic & Stone 39% / Carpet & Resilient 35% / Laminate & Wood 16% / Other 10% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 5.1% |
| Operating margin today | 5.1% |
| Margin expansion (value-band) | +0.0pp |
| Implied growth | 13.5% |
| Multiple paid | 15x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 10.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.11σ |
| cohort percentile (of 214 peers) | 36 |
| sustained it ~5 years at this level | 47% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.51x | 5 | expensive |
| Earnings | 1.32x | 5 | expensive |
| Relative | 1.98x | 2 | expensive |
| Growth | 0.76x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $367.52 | 0.37x | yes | FCF base $0.8B, growth 5% (input: historical growth), terminal g 4.0%, WACC 7.4%, 5yr projection |
| DCF Exit Multiple | Growth | $178.09 | 0.76x | yes | Exit EV/EBITDA: 6.5x / 8.5x / 10.5x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $74.05 | 1.83x | yes | BV/sh $126.08, ROE (TTM) 5.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $54.16 | 2.51x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $112.80 | 1.20x | yes | Rev $11.2B, growth 5% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $90.72 | 1.50x | yes | EPS $7.56, growth 5% (input: historical EPS growth), PEG=4.09 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $66.87 | 2.03x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.53B × (1−21%) / WACC 7.4% → EPV (no growth) |
| Residual Income | Asset | $51.75 | 2.62x | yes | BV $126.08 + 5yr PV of (ROE (TTM) 5.4% − Kₑ 9.3%) × BV; BV grows 3.5%/yr |
| Graham Number | Asset | $146.45 | 0.93x | yes | √(22.5 × EPS $7.56 × BVPS $126.08) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $1.26B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $107.23 | 1.27x | yes | FCF $811.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $102.62 | 1.32x | yes | SBC-adj FCF $0.78B (FCF $0.81B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $115.21 | 1.18x | yes | EPS $7.56 × (8.5 + 2×4.8%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $33.99 | 3.99x | yes | BV $126.08 × (ROIC 2.0% / WACC 7.4%) |
| P/Sales Sector | Relative | — | — | no | Revenue $11.18B × sector P/S 2.5x |
| PEG Fair Value | Relative | $54.91 | 2.47x | yes | EPS $7.56 × (PEG 1.5 × growth 4.8% (input: historical EPS growth)) → PE 7.3x |
| Earnings Yield | Earnings | $81.73 | 1.66x | yes | EPS $7.56 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Global Ceramic | operating | enterprise | $4.3b | $266.7m operating-income | withheld | unresolved no unit value |
| Flooring NA | operating | enterprise | $3.6b | $113.6m operating-income | withheld | unresolved no unit value |
| Flooring ROW | operating | enterprise | $2.9b | $212.9m operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $1.3b |
| Net debt / NOPAT (after-tax) | 2.82x |
| Net debt / operating income (pre-tax) | 2.23x |
| Interest coverage | 42.6x |
| Share count CAGR (buyback) | -1.2% |
| Burning cash | no |
Bullet Takeaways
- Mohawk is the scaled flooring manufacturer across three segments that the latest 10-K reports as Global Ceramic, Flooring North America, and Flooring Rest of the World at "40%, 34% and 26%, respectively, of the Company's total revenue", which makes the stock a leveraged bet on the housing and renovation cycle rather than on any single product.
- The most important number is profitability through the cycle: trailing operating margin near 4.6% and return on equity around 4.9% reflect a trough housing market, and the bull and bear cases turn entirely on whether those margins normalize higher or stay depressed.
- Watch the residential recovery and the Q2 2026 guide of $2.50 to $2.60 adjusted EPS: commercial channels are carrying demand while residential stays soft under high mortgage rates, and the timing of a residential turn is the swing factor.
Bull Case
The structural advantage here is scale across a fragmented industry, and the 10-K describes it plainly: Mohawk runs three large flooring segments, with Global Ceramic, Flooring North America, and Flooring Rest of the World accounting for "40%, 34% and 26%, respectively, of the Company's total revenue", spanning "broadloom carpet, carpet tile, rugs and mats, carpet pad, laminate, medium-density fiberboard ('MDF'), wood flooring, LVT, hybrid flooring and sheet vinyl". No single competitor matches that product breadth and manufacturing footprint. The advantage is not glamorous, but in a commodity-adjacent business it is what lets the company push higher-value products through the same distribution network and absorb cost shocks better than smaller rivals.
The case rests on what the current returns are NOT showing. Trailing operating margin of about 4.6% and return on equity near 4.9% are trough numbers, set by a residential market sitting on its hands while mortgage rates stay high. Management is not waiting passively: the company describes "action to optimize the Company's manufacturing and distribution footprint to reduce complexity", alongside new product introductions and promotional programs aimed at "both residential and commercial channels". Restructuring and productivity gains drop straight to margin when volume returns. The bull case is operating leverage in reverse, waiting to unwind: fixed-cost factories running below capacity today become high-incremental-margin factories when residential demand recovers.
The balance sheet gives the company time to wait. Interest coverage runs above thirty times trailing operating income, net debt sits at roughly 2.6 times operating income, and the share count has been shrinking, with 607,000 shares repurchased for $64 million in the first quarter alone. That is a company buying its own stock at trough earnings rather than issuing equity to survive them. The book value per share of about $136 sits above the $112.53 price (June 27, 2026), so a buyer today pays less than stated net worth for a business earning depressed but positive profits. If margins mean-revert toward their through-cycle level, both the earnings and the multiple the market is willing to pay can move at once.
Bear Case
The fragility is not in the debt load, which is modest, but in how completely the business depends on a cycle it does not control. The 10-K names the exposure directly: demand turns on "consumer confidence, income and spending, corporate and government spending, interest rate levels, availability of credit and demand for housing", and the company warns that "significant or prolonged declines in the U.S. or global economies could have a material adverse effect on the Company's business". A capital structure carrying about $1.3 billion of net debt is comfortable at mid-cycle margins. The question is what it looks like if the residential downturn extends for years rather than quarters, because the leverage ratio is calculated on operating income that is already depressed, and it rises mechanically if that income falls further.
The valuation lenses that look at assets agree the price is full on what the company actually earns today. Return on equity of 4.9% sits well below the roughly 9% cost of equity, which is why the book-value-plus-profitability methods land far under the price: a business earning less than its cost of capital is destroying value at the margin each year it persists, and the asset-based lens prices that honestly. The price holds up only on multiples and on a cash-flow read that assumes today's economics hold or improve. In other words, the price is paying for normalization that has not yet shown up in the returns. If margins stay where they are, the multiple is the only thing holding the stock, and multiples compress when earnings disappoint.
Competition compounds the cyclicality. The company concedes it "faces competition from a number of manufacturers and independent distributors" and from rivals "introducing new products or technologies that better meet customers' needs, whether through pricing, sustainability, quality, versatility or other characteristics." Flooring is replaceable and substitutable, imports press on price, and the residential customer can simply defer the purchase. The first-quarter print showed the shape of the risk: sales of $2.73 billion missed estimates even as EPS beat, and Q2 guidance at a $2.55 midpoint came in below the consensus near $2.73. The bull is right that operating leverage cuts both ways. The bear's point is that it is currently cutting the wrong way, and the timing of the turn is a housing-market call, not a company one.
Valuation
At $112.53 the market is paying roughly thirteen times trailing operating income, which inverts to about 4.5% annual operating growth sustained over five years. For a flooring business, that is not a demanding rate in isolation; it is within what Mohawk has delivered in better years. The stretch is in the persistence and in the assumption that margins recover from today's trough, not in the headline growth number.
The methods split along a clean line, and the split is the information. Peer multiples and the cash-flow methods reach the price comfortably: on a sector earnings multiple near eighteen times and a sector EV/EBITDA of twelve times, the implied values sit above $112.53. The asset-value lenses land well below it. The reason is the same in every case: return on equity of about 4.9% against a roughly 9% cost of equity. When a company earns less than its cost of capital, book-value-plus-profitability math discounts the equity below stated book, while multiple-based math, which looks at the price others pay for a dollar of sales or EBITDA, says the business is cheap. Both are correct about different things. The multiple says the franchise is worth more than its trough earnings imply; the asset lens says the trough earnings are real and currently value-destructive.
The balance sheet is the floor under the bet, and here it is genuinely supportive. Net debt of about $1.3 billion against trailing operating income of roughly $506 million is around 2.6 times, interest coverage runs above thirty times, and the company holds more than $870 million of liquid assets. This is not a company that has to be rescued by a recovery; it can fund the wait. The share count is falling, which means management is returning capital at trough prices rather than diluting. The whole case, then, reduces to one normalization question: book value per share of about $136 exceeds the price, so a buyer is paying below stated net worth for a profitable, well-financed, cyclically-depressed business. Whether that is cheap or fair depends on whether the residential cycle turns before the value-destructive trough returns become the permanent reality the asset lens currently prices.
Catalysts
Mohawk reported first-quarter 2026 results on April 30, with adjusted EPS of $1.90 beating consensus by roughly 5%, while net sales of $2.73 billion rose 8% as reported but fell about 2.6% on a constant-days, constant-currency basis and came in just short of estimates. The split inside the quarter is the story: Global Ceramic and Flooring Rest of the World showed higher operating income, while Flooring North America carried a lower margin, with management pointing to soft residential volumes and inflation as the drags and to commercial demand and restructuring savings as the offsets.
The near-term swing factor is guidance against demand. The company guided second-quarter 2026 adjusted EPS to a range of $2.50 to $2.60, a midpoint below the roughly $2.73 the street was modeling, which is the cautious-but-improving signal the market is weighing. Analyst opinion is mixed, clustering at a Hold consensus with price targets broadly in the $123 to $140 range. The capital-return cadence is also worth tracking: the company repurchased 607,000 shares for $64 million in the first quarter, a modest pace that some observers read as conservative given the trough valuation. The clearest forward catalyst remains the residential cycle, where any easing in mortgage rates or improvement in housing turnover would lift the segment that is currently holding the consolidated margin down.
Peer Cohorts (Per Segment, With Filing Citations)
Global Ceramic (reported)
- AWI (ARMSTRONG WORLD INDUSTRIES, INC.)
- FY2025 10-K: …maintaining strong brand awareness and trust. We are committed to delivering profitable revenue growth, strong cash flow generation and sustainable shareholder value by strengthening our core Mineral Fiber segment and expanding our Architectural Specialties segment into new, adjacent business categories and sectors.…
- FY2025 10-K: …stock of Geometrik Manufacturing, Inc. ("Geometrik"), based in Kelowna, British Columbia, Canada. Geometrik is a designer and manufacturer of wood acoustical ceiling and wall systems. The operations, assets and liabilities of Geometrik are included in our Architectural Specialties segment. In December 2024, we…
- TILE (INTERFACE INC)
- FY2025 10-K: …including Interface and FLOR, as well as the strength of the nora rubber flooring brands of noraplan and norament. An integral part of our marketing and sales efforts is our Interface Design Studio. This team of design experts creates custom-made samples of requested carpet designs to meet customer needs. In most…
- FY2025 10-K: …flooring solutions company, this multi-year effort positions us for success by focusing on: • Building strong global functions to support our selling teams • Accelerating growth through enhanced commercial productivity • Expanding margins through global supply chain management and simplifying operations • Reinforcing…
- OC (Owens Corning)
- FY2025 10-K: …leading global designer, manufacturer, marketer and distributor of interior and exterior doors and door systems for residential new construction and residential repair and remodeling. The addition of Masonite's market-leading doors business creates a new growth platform for the Company, strengthening the Company's…
- FY2025 10-K: . The transaction represents a strategic shift that has a major effect on the Company's operations and financial results. Effective January 1, 2025, the GR business's financial results are reflected in the Company's consolidated financial statements as discontinued operations for all periods presented. Changes in…
- FBIN (Fortune Brands Innovations, Inc.)
- FY2025 10-K: …February 2025. Mr. Novak served as Vice President, Global Logistics and Customer Service from October 2022 to February 2025. From January 2020 to October 2022, Mr. Novak served as Vice President, Global Distribution and Transportation for the Water Innovations business. Prior to that, Mr. Novak held various positions…
- FY2025 10-K: Segment Raw Materials Water Brass, zinc, resins, stainless steel and aluminum Outdoors Wood, aluminum, steel, plastics, resins, glass, vinyl and insulating foam Security Steel, zinc, brass and resins Intellectual property. Product innovation and branding are important to the success of our business. In addition to the…
- CSL (CARLISLE COMPANIES INCORPORATED)
- FY2025 10-K: …beyond production areas, as COS drives new product innovation, engineering, supply chain management, warranty and product rationalization. As demand accelerates for energy-efficient solutions for the sustainable buildings of the future, we will continue to emphasize the development of energy-efficient products,…
- FY2025 10-K: 021 to date Frank J. Ready 64 President, Carlisle Weatherproofing Technologies since February 2022; President and Chief Executive Officer, Henry Company from November 2014 to February 2022. September 2021 to date Stephen F. Schwar 63 Vice Chair, Carlisle Construction Materials since November 2025; President, Carlisle…
Flooring NA (reported)
- TILE (INTERFACE INC)
- FY2025 10-K: …flooring solutions company, this multi-year effort positions us for success by focusing on: • Building strong global functions to support our selling teams • Accelerating growth through enhanced commercial productivity • Expanding margins through global supply chain management and simplifying operations • Reinforcing…
- FY2025 10-K: . The transaction price for these sale and installation contracts is readily determinable between flooring material and installation services and typically is specifically identified in the contract with the customer. The Company does not have any other significant revenue streams outside of these sales of flooring…
- AWI (ARMSTRONG WORLD INDUSTRIES, INC.)
- FY2025 10-K: …in our Architectural Specialties segment. Manufacturing Plants As of December 31, 2025, we operated 22 manufacturing plants, including 19 plants located within the U.S. and three plants in Canada. WAVE operates seven additional plants in the U.S. to produce suspension system (grid) products, which we use and sell in…
- FY2025 10-K: …stock of Geometrik Manufacturing, Inc. ("Geometrik"), based in Kelowna, British Columbia, Canada. Geometrik is a designer and manufacturer of wood acoustical ceiling and wall systems. The operations, assets and liabilities of Geometrik are included in our Architectural Specialties segment. In December 2024, we…
- OC (Owens Corning)
- FY2025 10-K: Roofing segment are laminate asphalt roofing shingles. Other products include roofing components, composite lumber and oxidized asphalt primarily used in residential construction. Roofing also manufactures and sells glass mat and specialty veil materials used in building and construction applications We have been able…
- FY2025 10-K: …residential construction. Roofing also manufactures and sells glass mat and specialty veil materials used in building and construction applications. Insulation - Within our Insulation segment, the Company manufactures and sells thermal and acoustical batts, loose fill insulation, spray foam insulation, wet use…
- FBIN (Fortune Brands Innovations, Inc.)
- FY2025 10-K: …those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application. Recent Developments In January 2025, we announced plans to consolidate our U.S. regional offices into one campus…
- FY2025 10-K: …social and governance matters, (xix) potential liabilities and costs from claims and litigation, (xx) changes in government and industry regulatory standards, (xxi) future tax law changes or the interpretation of existing tax laws, and (xxii) our ability to secure and protect our intellectual property rights, as well…
Flooring ROW (reported)
- TILE (INTERFACE INC)
- FY2025 10-K: …including Interface and FLOR, as well as the strength of the nora rubber flooring brands of noraplan and norament. An integral part of our marketing and sales efforts is our Interface Design Studio. This team of design experts creates custom-made samples of requested carpet designs to meet customer needs. In most…
- FY2025 10-K: …flooring solutions company, this multi-year effort positions us for success by focusing on: • Building strong global functions to support our selling teams • Accelerating growth through enhanced commercial productivity • Expanding margins through global supply chain management and simplifying operations • Reinforcing…
- AWI (ARMSTRONG WORLD INDUSTRIES, INC.)
- FY2025 10-K: …in our Architectural Specialties segment. Manufacturing Plants As of December 31, 2025, we operated 22 manufacturing plants, including 19 plants located within the U.S. and three plants in Canada. WAVE operates seven additional plants in the U.S. to produce suspension system (grid) products, which we use and sell in…
- FY2025 10-K: …produce goods for inventory and sell on credit to our customers. Generally, we believe our distributors and home center customers carry inventory as needed to meet local or rapid delivery requirements. We sell our products to select, pre-approved customers using customary trade terms that allow for payment in the…
- OC (Owens Corning)
- FY2025 10-K: Roofing segment are laminate asphalt roofing shingles. Other products include roofing components, composite lumber and oxidized asphalt primarily used in residential construction. Roofing also manufactures and sells glass mat and specialty veil materials used in building and construction applications We have been able…
- FY2025 10-K: …driven by both residential repair and remodeling activity and by new residential construction. Roofing damage from major storms can significantly increase demand in this segment. As a result, sales in this segment do not always follow seasonal home improvement, remodeling and new construction industry patterns. Our…
- CSL (CARLISLE COMPANIES INCORPORATED)
- FY2025 10-K: …above average margin profile through COS; and • Further expand our offering of innovative solutions to U.S. commercial roofing markets, including broadening our product breadth and geographic reach into architectural metals. 4 Table of Content s Key growth initiatives include: • Grow profitability through the…
- FY2025 10-K: Materials Key raw materials for this segment include MDI, silicone polymer, asphalt, glass mat, styrene and expanded polystyrene insulation bead. These raw materials generally have at least two vendor sources. The vendor typically has multiple processing facilities for key raw materials that are single sourced.…
- FBIN (Fortune Brands Innovations, Inc.)
- FY2025 10-K: Segment Raw Materials Water Brass, zinc, resins, stainless steel and aluminum Outdoors Wood, aluminum, steel, plastics, resins, glass, vinyl and insulating foam Security Steel, zinc, brass and resins Intellectual property. Product innovation and branding are important to the success of our business. In addition to the…
- FY2025 10-K: …faucets, accessories, luxury hardware, kitchen sinks and waste disposals, predominantly under the Moen, ROHL, Riobel, Victoria+Albert, Perrin & Rowe, Aqualisa, Shaws, Emtek, Schaub and SpringWell brands. The Outdoors segment includes fiberglass and steel entry door systems under the Therma-Tru brand name, storm,…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Mohawk Q1 2026 earnings release, April 30 2026 · Mohawk FY2025 10-K