Value
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.3 |
| P/S | 9.8 |
| EV/EBITDA | 7.8 |
| Fwd P/E | 7.9 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.3x
- ▸PEG: 0.28
- ▸Attractively valued
MHK · Why this verdict
Why Mohawk Industries (MHK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.8/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Mohawk Industries combines four consecutive earnings beats, an attractively priced forward multiple at 11.3x, and improving momentum signals — but with the stock essentially at near-term resistance with less than 2% headroom, the setup rewards current holders more than it justifies adding new capital.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Four consecutive quarterly earnings beats and a forward P/E of 11.3x with a PEG of 0.17 offer a combination of earnings reliability and valuation support that is uncommon in cyclical consumer names. Catalyst track record | A fifth consecutive beat at the next earnings report in approximately 44 days would reinforce the earnings quality story and support a moderate multiple re-rating. | ↑Improving |
| CounterAn average earnings surprise of only 3.3% across four beats suggests modestly conservative guidance rather than strongly outperforming demand; with 14% short interest, any miss could trigger outsized downside. | ||
Free cash flow runs at 207% of net income and the balance sheet earns a financial-strength score of 8 of 9, indicating a business converting earnings to cash well above what the income statement alone implies. Quality breakdown | Free cash flow stays above 150% of net income and the financial-strength score remains at 7 or above for the next four quarters. | →Stable |
| CounterWithout a discernible competitive moat, the cash conversion advantage could erode if the cyclical recovery stalls, particularly given thin gross margins. | ||
Despite trading below the 200-day moving average on a negative trend slope, on-balance volume has been rising and MACD has been improving — signs that buyers are accumulating shares ahead of a potential price recovery. Momentum breakdown | The stock crosses above its 200-day moving average within the next 3 months, confirming the recovery phase. | ↓Deteriorating |
| CounterA confirmed 30-day moving average slope of -2.5% describes a downtrend; volume accumulation can persist for extended periods before price follows, leaving holders exposed to further drawdown. | ||
The stock sits just below near-term resistance with approximately 2% headroom to the take-profit level, producing an unfavorable reward-to-risk ratio that does not support initiating or adding to a position at this price. Price targets | If the fundamental and technical case strengthens, the stock breaks decisively above $113.71 and builds upside to a higher target. | ↓Deteriorating |
| CounterA recovery setup with improving MACD and a strong earnings history could generate enough momentum to push through current resistance and establish a higher trading range. | ||
Four consecutive quarterly earnings beats and a forward P/E of 11.3x with a PEG of 0.17 offer a combination of earnings reliability and valuation support that is uncommon in cyclical consumer names.
↑ImprovingCatalyst track record
- Expectation
- A fifth consecutive beat at the next earnings report in approximately 44 days would reinforce the earnings quality story and support a moderate multiple re-rating.
CounterAn average earnings surprise of only 3.3% across four beats suggests modestly conservative guidance rather than strongly outperforming demand; with 14% short interest, any miss could trigger outsized downside.
Free cash flow runs at 207% of net income and the balance sheet earns a financial-strength score of 8 of 9, indicating a business converting earnings to cash well above what the income statement alone implies.
→StableQuality breakdown
- Expectation
- Free cash flow stays above 150% of net income and the financial-strength score remains at 7 or above for the next four quarters.
CounterWithout a discernible competitive moat, the cash conversion advantage could erode if the cyclical recovery stalls, particularly given thin gross margins.
Despite trading below the 200-day moving average on a negative trend slope, on-balance volume has been rising and MACD has been improving — signs that buyers are accumulating shares ahead of a potential price recovery.
↓DeterioratingMomentum breakdown
- Expectation
- The stock crosses above its 200-day moving average within the next 3 months, confirming the recovery phase.
CounterA confirmed 30-day moving average slope of -2.5% describes a downtrend; volume accumulation can persist for extended periods before price follows, leaving holders exposed to further drawdown.
The stock sits just below near-term resistance with approximately 2% headroom to the take-profit level, producing an unfavorable reward-to-risk ratio that does not support initiating or adding to a position at this price.
↓DeterioratingPrice targets
- Expectation
- If the fundamental and technical case strengthens, the stock breaks decisively above $113.71 and builds upside to a higher target.
CounterA recovery setup with improving MACD and a strong earnings history could generate enough momentum to push through current resistance and establish a higher trading range.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.1 |
| ROA | 2.6 |
| Gross margin | 1.2 |
| Op margin | 2.9 |
| Net margin | 2.3 |
| Current ratio | 6.7 |
| FCF quality | 10.0 |
| Moat | 5.2 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 202% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.7 |
| EPS growth | 10.0 |
Momentum
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.1 |
- ▸Overbought (RSI 71)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.3 |
| Analyst rating | 7.3 |
| Price target | 5.1 |
Insider
3.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Notable insider selling — $11,901,565 (0.138% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 3.2 |
| growth rank | 3.8 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.6 |
| 52w position | 9.2 |
| gap | 6.0 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 5.0 |
| volatility | 1.1 |
| put call | 5.6 |
| implied vol | 4.5 |
| max pain risk | 3.0 |
| beta | 6.3 |
| debt equity | 8.9 |
| news risk | 6.0 |
- ▸High short interest: 21%
- ▸Above max pain $85
Catalyst
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.5>=5.5
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.50
- NEWS_BOOST:ANALYST_CLUSTER(3)
- EARNINGS_PROXIMITY:93d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.63
Upside
-9.5%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.63 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.7, Momentum at 7.5, and Catalyst at 7.4; the weakest are Insider at 3.3, Technical at 4.2, and Risk (lower is worse) at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.63 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Streak Valuation
Trip ifEPS surprise falls below 0% in the next reported quarter.
- P2Cash Conversion Financial Strength
Trip ifFree cash flow falls below 100% of net income for 2 consecutive quarters.
- P3Recovery Momentum Emerging
Trip ifOn-balance volume reverses to a declining trend while the stock remains below its 200-day moving average for 8 consecutive weeks.
- P4Limited Upside At Resistance
Trip ifStock breaks above $113.71 and holds above that level for 3 consecutive weeks.