Warning Signs Still Flashing at Mohawk (MHK)

The earnings quality concerns continue to plague results

We have highlighted earnings quality problems at Mohawk (MHK) in the past including our September piece Mohawk (MHK) May Not Have Hit the Floor Yet. However, we continue to see earnings quality problems investors should be paying attention to.

The company reported non-GAAP EPS of $1.86 in 1Q24 which was 18 cps ahead of the consensus estimate. Revenue was a slight beat. However, as is often the case with MHK, there were two one-time accounting-related benefits that we believe accounted for almost all of the earnings beat. Both items have been benefitting results for multiple quarters and we believe both are likely to shift to becoming earnings headwinds in 2024.

Let’s get behind the numbers…

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