Intrinsic value of Mohawk Industries - MHK

Previous Close

$248.97

  Intrinsic Value

$176.99

stock screener

  Rating & Target

sell

-29%

  Value-price divergence*

+82%

Previous close

$248.97

 
Intrinsic value

$176.99

 
Up/down potential

-29%

 
Rating

sell

 
Value-price divergence*

+82%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MHK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 18.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.99
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  8,959
  9,165
  9,401
  9,665
  9,958
  10,280
  10,630
  11,009
  11,417
  11,855
  12,324
  12,824
  13,356
  13,922
  14,523
  15,159
  15,833
  16,546
  17,298
  18,093
  18,932
  19,816
  20,749
  21,731
  22,765
  23,855
  25,001
  26,208
  27,477
  28,812
  30,216
Variable operating expenses, $m
 
  4,596
  4,708
  4,834
  4,974
  5,127
  5,294
  5,474
  5,669
  5,878
  6,101
  6,112
  6,366
  6,636
  6,922
  7,225
  7,546
  7,886
  8,245
  8,624
  9,023
  9,445
  9,889
  10,357
  10,850
  11,370
  11,916
  12,491
  13,096
  13,732
  14,401
Fixed operating expenses, $m
 
  3,346
  3,429
  3,515
  3,603
  3,693
  3,785
  3,880
  3,977
  4,076
  4,178
  4,283
  4,390
  4,499
  4,612
  4,727
  4,845
  4,967
  5,091
  5,218
  5,348
  5,482
  5,619
  5,760
  5,904
  6,051
  6,203
  6,358
  6,517
  6,679
  6,846
Total operating expenses, $m
  7,679
  7,942
  8,137
  8,349
  8,577
  8,820
  9,079
  9,354
  9,646
  9,954
  10,279
  10,395
  10,756
  11,135
  11,534
  11,952
  12,391
  12,853
  13,336
  13,842
  14,371
  14,927
  15,508
  16,117
  16,754
  17,421
  18,119
  18,849
  19,613
  20,411
  21,247
Operating income, $m
  1,280
  1,224
  1,263
  1,316
  1,382
  1,460
  1,551
  1,654
  1,771
  1,901
  2,044
  2,429
  2,601
  2,787
  2,989
  3,207
  3,441
  3,693
  3,963
  4,252
  4,560
  4,889
  5,240
  5,614
  6,011
  6,434
  6,883
  7,359
  7,864
  8,400
  8,968
EBITDA, $m
  1,689
  1,722
  1,768
  1,829
  1,903
  1,990
  2,092
  2,206
  2,335
  2,478
  2,635
  2,807
  2,995
  3,198
  3,417
  3,654
  3,908
  4,181
  4,473
  4,785
  5,118
  5,474
  5,852
  6,255
  6,683
  7,137
  7,620
  8,132
  8,675
  9,250
  9,859
Interest expense (income), $m
  57
  84
  87
  91
  96
  101
  106
  112
  119
  125
  133
  141
  149
  158
  168
  178
  189
  200
  212
  225
  239
  253
  268
  284
  300
  318
  336
  356
  376
  398
  420
Earnings before tax, $m
  1,241
  1,140
  1,176
  1,225
  1,286
  1,359
  1,445
  1,542
  1,653
  1,776
  1,912
  2,288
  2,452
  2,629
  2,821
  3,029
  3,252
  3,493
  3,751
  4,027
  4,322
  4,637
  4,972
  5,330
  5,711
  6,116
  6,546
  7,003
  7,488
  8,003
  8,548
Tax expense, $m
  307
  308
  318
  331
  347
  367
  390
  416
  446
  479
  516
  618
  662
  710
  762
  818
  878
  943
  1,013
  1,087
  1,167
  1,252
  1,343
  1,439
  1,542
  1,651
  1,768
  1,891
  2,022
  2,161
  2,308
Net income, $m
  930
  832
  859
  894
  939
  992
  1,055
  1,126
  1,206
  1,296
  1,395
  1,670
  1,790
  1,919
  2,060
  2,211
  2,374
  2,550
  2,738
  2,939
  3,155
  3,385
  3,630
  3,891
  4,169
  4,465
  4,779
  5,112
  5,466
  5,842
  6,240

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  122
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,231
  10,344
  10,610
  10,909
  11,239
  11,602
  11,997
  12,425
  12,886
  13,380
  13,909
  14,474
  15,075
  15,714
  16,392
  17,110
  17,870
  18,674
  19,524
  20,421
  21,368
  22,366
  23,418
  24,527
  25,695
  26,924
  28,218
  29,580
  31,012
  32,519
  34,104
Adjusted assets (=assets-cash), $m
  10,109
  10,344
  10,610
  10,909
  11,239
  11,602
  11,997
  12,425
  12,886
  13,380
  13,909
  14,474
  15,075
  15,714
  16,392
  17,110
  17,870
  18,674
  19,524
  20,421
  21,368
  22,366
  23,418
  24,527
  25,695
  26,924
  28,218
  29,580
  31,012
  32,519
  34,104
Revenue / Adjusted assets
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
  0.886
Average production assets, $m
  4,145
  4,243
  4,352
  4,475
  4,611
  4,759
  4,922
  5,097
  5,286
  5,489
  5,706
  5,937
  6,184
  6,446
  6,724
  7,019
  7,331
  7,661
  8,009
  8,377
  8,765
  9,175
  9,607
  10,061
  10,540
  11,045
  11,576
  12,134
  12,722
  13,340
  13,990
Working capital, $m
  754
  2,062
  2,115
  2,175
  2,241
  2,313
  2,392
  2,477
  2,569
  2,667
  2,773
  2,885
  3,005
  3,133
  3,268
  3,411
  3,562
  3,723
  3,892
  4,071
  4,260
  4,459
  4,668
  4,889
  5,122
  5,367
  5,625
  5,897
  6,182
  6,483
  6,799
Total debt, $m
  2,511
  2,494
  2,608
  2,736
  2,878
  3,033
  3,203
  3,386
  3,584
  3,796
  4,023
  4,265
  4,523
  4,797
  5,088
  5,396
  5,722
  6,067
  6,432
  6,817
  7,223
  7,651
  8,102
  8,578
  9,079
  9,606
  10,162
  10,746
  11,360
  12,007
  12,686
Total liabilities, $m
  4,454
  4,438
  4,552
  4,680
  4,822
  4,977
  5,147
  5,330
  5,528
  5,740
  5,967
  6,209
  6,467
  6,741
  7,032
  7,340
  7,666
  8,011
  8,376
  8,761
  9,167
  9,595
  10,046
  10,522
  11,023
  11,550
  12,106
  12,690
  13,304
  13,951
  14,630
Total equity, $m
  5,776
  5,907
  6,058
  6,229
  6,418
  6,625
  6,850
  7,095
  7,358
  7,640
  7,942
  8,265
  8,608
  8,973
  9,360
  9,770
  10,204
  10,663
  11,148
  11,661
  12,201
  12,771
  13,372
  14,005
  14,672
  15,374
  16,112
  16,890
  17,708
  18,568
  19,473
Total liabilities and equity, $m
  10,230
  10,345
  10,610
  10,909
  11,240
  11,602
  11,997
  12,425
  12,886
  13,380
  13,909
  14,474
  15,075
  15,714
  16,392
  17,110
  17,870
  18,674
  19,524
  20,422
  21,368
  22,366
  23,418
  24,527
  25,695
  26,924
  28,218
  29,580
  31,012
  32,519
  34,103
Debt-to-equity ratio
  0.435
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.640
  0.640
  0.650
  0.650
Adjusted equity ratio
  0.559
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  930
  832
  859
  894
  939
  992
  1,055
  1,126
  1,206
  1,296
  1,395
  1,670
  1,790
  1,919
  2,060
  2,211
  2,374
  2,550
  2,738
  2,939
  3,155
  3,385
  3,630
  3,891
  4,169
  4,465
  4,779
  5,112
  5,466
  5,842
  6,240
Depreciation, amort., depletion, $m
  409
  498
  505
  512
  521
  531
  541
  552
  564
  577
  591
  378
  394
  411
  428
  447
  467
  488
  510
  534
  558
  584
  612
  641
  671
  703
  737
  773
  810
  850
  891
Funds from operations, $m
  1,221
  1,330
  1,363
  1,407
  1,460
  1,523
  1,595
  1,678
  1,770
  1,873
  1,986
  2,049
  2,184
  2,330
  2,488
  2,658
  2,841
  3,038
  3,248
  3,473
  3,713
  3,969
  4,242
  4,532
  4,840
  5,168
  5,516
  5,885
  6,277
  6,691
  7,131
Change in working capital, $m
  -107
  46
  53
  59
  66
  72
  79
  85
  92
  99
  105
  113
  120
  127
  135
  143
  152
  160
  169
  179
  189
  199
  210
  221
  233
  245
  258
  271
  286
  300
  316
Cash from operations, $m
  1,328
  1,284
  1,310
  1,347
  1,394
  1,450
  1,517
  1,593
  1,679
  1,775
  1,881
  1,936
  2,064
  2,202
  2,353
  2,515
  2,690
  2,877
  3,079
  3,294
  3,524
  3,770
  4,032
  4,311
  4,608
  4,923
  5,258
  5,614
  5,991
  6,391
  6,815
Maintenance CAPEX, $m
  0
  -264
  -270
  -277
  -285
  -294
  -303
  -313
  -325
  -337
  -350
  -363
  -378
  -394
  -411
  -428
  -447
  -467
  -488
  -510
  -534
  -558
  -584
  -612
  -641
  -671
  -703
  -737
  -773
  -810
  -850
New CAPEX, $m
  -672
  -98
  -109
  -122
  -136
  -149
  -162
  -175
  -189
  -203
  -217
  -232
  -247
  -262
  -278
  -295
  -312
  -330
  -349
  -368
  -388
  -409
  -432
  -455
  -479
  -504
  -531
  -559
  -588
  -618
  -650
Cash from investing activities, $m
  -672
  -362
  -379
  -399
  -421
  -443
  -465
  -488
  -514
  -540
  -567
  -595
  -625
  -656
  -689
  -723
  -759
  -797
  -837
  -878
  -922
  -967
  -1,016
  -1,067
  -1,120
  -1,175
  -1,234
  -1,296
  -1,361
  -1,428
  -1,500
Free cash flow, $m
  656
  921
  931
  947
  973
  1,008
  1,051
  1,104
  1,165
  1,235
  1,314
  1,341
  1,439
  1,546
  1,664
  1,792
  1,931
  2,081
  2,242
  2,416
  2,602
  2,802
  3,016
  3,244
  3,488
  3,747
  4,024
  4,318
  4,631
  4,963
  5,315
Issuance/(repayment) of debt, $m
  -630
  105
  114
  128
  142
  156
  170
  183
  198
  212
  227
  242
  258
  274
  291
  308
  326
  345
  364
  385
  406
  428
  451
  476
  501
  527
  555
  584
  615
  646
  680
Issuance/(repurchase) of shares, $m
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -624
  105
  114
  128
  142
  156
  170
  183
  198
  212
  227
  242
  258
  274
  291
  308
  326
  345
  364
  385
  406
  428
  451
  476
  501
  527
  555
  584
  615
  646
  680
Total cash flow (excl. dividends), $m
  40
  1,026
  1,045
  1,075
  1,115
  1,164
  1,221
  1,287
  1,363
  1,447
  1,541
  1,583
  1,697
  1,821
  1,955
  2,100
  2,257
  2,426
  2,607
  2,801
  3,009
  3,231
  3,467
  3,720
  3,989
  4,275
  4,579
  4,902
  5,245
  5,609
  5,995
Retained Cash Flow (-), $m
  -922
  -131
  -152
  -170
  -189
  -207
  -226
  -244
  -263
  -282
  -302
  -322
  -343
  -365
  -387
  -410
  -434
  -459
  -485
  -512
  -540
  -570
  -601
  -633
  -667
  -702
  -739
  -778
  -818
  -860
  -905
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  895
  893
  905
  926
  956
  995
  1,043
  1,100
  1,165
  1,239
  1,261
  1,354
  1,456
  1,568
  1,690
  1,823
  1,966
  2,122
  2,289
  2,468
  2,661
  2,867
  3,087
  3,322
  3,573
  3,840
  4,125
  4,427
  4,749
  5,090
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  857
  814
  783
  756
  733
  712
  692
  673
  653
  631
  579
  556
  530
  501
  470
  436
  400
  362
  324
  286
  249
  213
  180
  149
  121
  96
  75
  57
  43
  31
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Mohawk Industries, Inc. designs, manufactures, sources, distributes, and markets flooring products for remodeling and new constructions of residential and commercial spaces worldwide. It operates through three segments: Global Ceramic, Flooring North America (Flooring NA), and Flooring Rest of the World (Flooring ROW). The Global Ceramic segment provides a range of ceramic tile, porcelain tile, and natural stone products; and sources, markets, and distributes other tile related products. This segment markets and distributes its products under the American Olean, Daltile, KAI, Kerama Marazzi, Marazzi, and Ragno brands. The Flooring NA segment offers product lines in a range of colors, textures, and patterns, including carpets, rugs, and carpet pads; hardwood and laminate products; and vinyl products, such as luxury vinyl tiles. This segment markets and distributes its flooring products under the Aladdin, Bigelow, Columbia Flooring, Durkan, Horizon, IVC, Karastan, Lees, Mohawk, Pergo, Portico, QuickStep, and SmartStrand brands. The Flooring ROW segment provides laminate and hardwood flooring, as well as roofing elements, insulation boards, medium-density fiberboards, chipboards, and vinyl flooring products under the IVC, Moduleo, Pergo, Quick-Step, and Unilin brands; and licenses patents related to flooring manufacturers. The company sells its products through independent distributors, home center retailers, independent and individual floor covering retailers, ceramic specialists, commercial contractors, commercial end users, mass merchandisers, department stores, shop at home, buying groups, retailers, and wholesalers, as well as private labeling programs. Mohawk Industries, Inc. was founded in 1988 and is headquartered in Calhoun, Georgia.

FINANCIAL RATIOS  of  Mohawk Industries (MHK)

Valuation Ratios
P/E Ratio 19.9
Price to Sales 2.1
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 28.1
Growth Rates
Sales Growth Rate 11%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.3%
Cap. Spend. - 3 Yr. Gr. Rate 12.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 19.5%
Total Debt to Equity 43.5%
Interest Coverage 23
Management Effectiveness
Return On Assets 9.6%
Ret/ On Assets - 3 Yr. Avg. 8.1%
Return On Total Capital 11.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 17.5%
Return On Equity - 3 Yr. Avg. 14.2%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 31.8%
Gross Margin - 3 Yr. Avg. 30.1%
EBITDA Margin 19.1%
EBITDA Margin - 3 Yr. Avg. 16%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 11.5%
Pre-Tax Margin 13.9%
Pre-Tax Margin - 3 Yr. Avg. 10.5%
Net Profit Margin 10.4%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 24.7%
Eff/ Tax Rate - 3 Yr. Avg. 20.7%
Payout Ratio 0%

MHK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MHK stock intrinsic value calculation we used $8959 million for the last fiscal year's total revenue generated by Mohawk Industries. The default revenue input number comes from 2016 income statement of Mohawk Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MHK stock valuation model: a) initial revenue growth rate of 2.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for MHK is calculated based on our internal credit rating of Mohawk Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Mohawk Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MHK stock the variable cost ratio is equal to 50.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3264 million in the base year in the intrinsic value calculation for MHK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Mohawk Industries.

Corporate tax rate of 27% is the nominal tax rate for Mohawk Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MHK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MHK are equal to 46.3%.

Life of production assets of 15.7 years is the average useful life of capital assets used in Mohawk Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MHK is equal to 22.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5776 million for Mohawk Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 73.597 million for Mohawk Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Mohawk Industries at the current share price and the inputted number of shares is $18.3 billion.

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COMPANY NEWS

▶ Mohawk Industries beats 2Q profit forecasts   [Jul-27-17 11:46PM  Associated Press]
▶ [$$] Mohawk's Momentum Is Growing   [May-06-17 12:01AM  Barrons.com]
▶ Leading Home Durables Cos. Report Q1 Results   [Apr-28-17 03:15PM  Investopedia]
▶ Mohawk Industries Reports Record Q1 Results   [Apr-27-17 05:13PM  PR Newswire]
▶ Mohawk Industries beats 1Q profit forecasts   [04:34PM  Associated Press]
▶ Mohawk Industries beats Street 4Q forecasts   [04:43PM  Associated Press]
▶ Best Midcap Stocks To Buy According To Billionaire Loeb   [Dec-09-16 03:38PM  at Insider Monkey]
▶ Heres What Smart Money Thinks of Mohawk Industries, Inc. (MHK)   [Nov-29-16 03:18PM  at Insider Monkey]
▶ Merrill Lynch Makes 2 Huge New Additions to US 1 Stock List   [Nov-16-16 10:10AM  at 24/7 Wall St.]
Stock chart of MHK Financial statements of MHK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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