Record 2025 performance was driven by the One Interface strategy, which successfully consolidated global functions to support local selling teams and accelerated commercial productivity. The U.S. combined selling model enabled effective cross-selling across carpet tile, LVT, and rubber, resulting in a 17% increase in global rubber billings for the year. Growth was broad-based across all regions and product categories, with both price and volume increases contributing to a 4% currency-neutral net sales ...

Core Viewpoint - Mohawk Industries, Inc. is experiencing significant stock underperformance amid challenging market conditions, with recent financial results falling short of expectations [3][5][6] Company Overview - Mohawk Industries, Inc. is a leading global flooring manufacturer based in Calhoun, Georgia, specializing in premium carpets, hardwood, laminate, tiles, and stone products for both residential and commercial markets [1] - The company has a market capitalization of $6.82 billion, categorizing it as a mid-cap stock [2] Stock Performance - Mohawk's shares reached a 52-week high of $143.13 in September but have since declined by 23.7%, underperforming the broader market and its sector [3] - Over the past three months, the stock has decreased by 16.8%, while the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) has seen only marginal declines [3] - In the last 52 weeks, Mohawk's stock has dropped by 12.4%, contrasting with a 10.9% increase over the past six months [4] Financial Results - In the third quarter, Mohawk reported net sales of $2.76 billion, a modest year-over-year growth of 1.4%, surpassing Wall Street's expectation of $2.73 billion [5] - The company's earnings per share (EPS) fell by 7.9% year-over-year to $2.67, missing the anticipated $2.68, leading to a 7% intraday stock drop following the announcement [6] - Comparatively, another furnishings firm, Interface, Inc. (TILE), has shown a 10.2% increase over the past 52 weeks and a 41% increase over the past six months, highlighting Mohawk's underperformance [6]

Core Insights - Meros Investment Management sold 259,973 shares of Interface, reducing its position by approximately $4.1 million in the third quarter, leaving a remaining stake of 166,576 shares valued at $4.8 million as of September 30 [2][3][7] - The sale decreased Interface's representation in Meros's reportable assets under management (AUM) to 2.1%, down from 4.24% in the previous quarter [4] - Interface's stock price was $27.32, reflecting a 5% increase over the past year, but underperforming compared to the S&P 500, which rose 13% in the same period [4] Company Overview - Interface, Inc. has a market capitalization of $1.6 billion, with a trailing twelve months (TTM) revenue of $1.4 billion and a net income of $113 million [5] - The company specializes in modular flooring products, including carpet tiles, resilient flooring, and luxury vinyl tiles, serving both commercial and residential markets [6][9] Recent Performance - In the third quarter, Interface reported net sales of $364.5 million, a 5.9% increase year-over-year, and a GAAP EPS of $0.78, which is a 62.5% increase from the previous year [10] - Management raised full-year sales guidance to nearly $1.38 to $1.39 billion, indicating confidence in future performance [10] - The company generated $76.7 million in cash during the third quarter, highlighting strong cash flow and operational momentum [11] Sales Channels - Interface generates revenue through direct sales to end-users, indirect sales via contractors and distributors, and online channels, complemented by project management and maintenance services [12]

Core Insights - The article emphasizes the importance of efficiency levels in assessing a company's potential for profitability, suggesting that higher efficiency correlates with better price performance [1] Efficiency Ratios - Popular efficiency ratios are crucial for measuring a company's efficiency, including Receivables Turnover, Asset Utilization, Inventory Turnover, and Operating Margin [2][3][4][5] - Receivables Turnover indicates a company's ability to collect debts, with a higher ratio being more desirable [2] - Asset Utilization measures how effectively a company converts its assets into sales, with higher values indicating better efficiency [3] - Inventory Turnover assesses a company's ability to manage inventory relative to its cost of goods sold, where a high ratio suggests efficient inventory management [4] - Operating Margin reflects a company's control over operating expenses, with higher margins indicating better efficiency compared to peers [5] Screening Criteria - The screening process includes a favorable Zacks Rank of 1 (Strong Buy) alongside the efficiency ratios to enhance profitability [6] - The criteria narrowed down a universe of over 7,906 stocks to just 14, focusing on those with efficiency ratios above industry averages [7] Selected Stocks - The top three stocks identified for their efficiency ratios are Owlet (OWLT), Interface (TILE), and Equity Bancshares (EQBK) [8][9] - Owlet has an impressive average four-quarter earnings surprise of 87.8%, indicating strong performance [10] - Interface, known for its modular carpets, has a four-quarter earnings surprise of nearly 30.3% [11] - Equity Bancshares, providing financial services, has a four-quarter earnings surprise of 15.4% [12]

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment returns Group 1: Company Earnings Estimates - Norwood Financial Corp. (NWFL) has seen a 16.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Kennametal Inc. (KMT) has experienced a 25% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Topgolf Callaway Brands Corp. (MODG) has seen a nearly 59% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Interface, Inc. (TILE) has experienced an 8.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Universal Health Services, Inc. (UHS) has seen a 6.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Core Insights - Three stocks with strong value characteristics and a buy rank are highlighted for investors to consider on November 28 Group 1: Interface, Inc. (TILE) - Interface, Inc. is a modular carpet products company with a Zacks Rank 1 [1] - The Zacks Consensus Estimate for its current year earnings has increased by 8.8% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 15.05, significantly lower than the S&P 500's P/E of 25.07 [1] - Interface possesses a Value Score of A [1] Group 2: Universal Health Services, Inc. (UHS) - Universal Health Services, Inc. operates hospitals and outpatient and behavioral health care facilities, also holding a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its current year earnings has increased by 6.7% over the last 60 days [2] - The company has a price-to-earnings ratio (P/E) of 11.19, compared to the S&P 500's P/E of 25.07 [2] - Universal Health possesses a Value Score of A [2] Group 3: Plains GP Holdings, L.P. (PAGP) - Plains GP Holdings, L.P. is a midstream infrastructure systems company with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings has increased by 2.9% over the last 60 days [3] - The company has a price-to-earnings ratio (P/E) of 12.89, lower than the industry average of 18.90 [3] - Plains GP possesses a Value Score of A [3]

Group 1 - Interface (TILE) stock experienced an improvement in its Relative Strength (RS) Rating, increasing from 70 to 75, indicating better price performance over the past 52 weeks [1] - Legence stock received a Relative Strength Rating upgrade to 93, reflecting its improving technical performance [2] - Arcosa demonstrated market leadership with a jump in its RS Rating to 82, while Interface reached a notable RS Rating of 96 [4] Group 2 - The Relative Strength Rating is a score from 1 (worst) to 99 (best) that identifies price movement, which is crucial for assessing stock performance [1] - Stocks with rising Relative Strength include Interface and Arcosa, both showing significant improvements in their ratings [4]

Core Insights - Investors prioritize companies with consistent profitability, measured effectively by net profit margin, which reflects operational efficiency and management quality [1][2] Profitability Metrics - Net profit margin is calculated as Net profit divided by Sales multiplied by 100, indicating a company's ability to convert sales into profits [2] - A strong net profit margin suggests effective cost control and operational strength, essential for rewarding stakeholders and attracting investors [2] Industry Comparisons - Net profit margin varies across industries, complicating direct comparisons; it is crucial for traditional sectors but may be less relevant for technology firms [3] - Differences in accounting practices, particularly regarding non-cash expenses, further complicate comparisons [4] Investment Strategy - A healthy net profit margin and solid EPS growth are key elements sought in a business model, supplemented by additional criteria for maximizing returns [5] Screening Parameters - Criteria for screening include a net margin of at least 0%, positive percentage change in EPS, high broker ratings, and a favorable Zacks Rank [6] - Stocks with a VGM Score of A or B combined with a Zacks Rank of 1 or 2 are identified as having the best upside potential [7] Company Highlights - **SkyWest, Inc. (SKYW)**: Operates as a regional airline with a Zacks Rank of 1 and a VGM Score of A; 2025 earnings estimate revised upward by 3.8% to $10.33 per share [8] - **Interface, Inc. (TILE)**: Largest manufacturer of modular carpets, also holds a Zacks Rank of 1 and a VGM Score of A; 2025 earnings estimate revised to $1.85 per share from $1.70 [9] - **FreightCar America, Inc. (RAIL)**: Specializes in manufacturing railroad freight cars, currently has a Zacks Rank of 2 and a VGM Score of A; earnings estimate remained unchanged [10][11] - **Standard Motor Products, Inc. (SMP)**: Leading manufacturer of automotive replacement parts, holds a Zacks Rank of 2 and a VGM Score of A; 2025 earnings estimate revised upward by $0.04 to $3.80 per share [12][13]

Core Insights - Interface's third quarter results demonstrate effective execution of its One Interface strategy, with strong momentum in the health care segment and broad regional growth as key drivers [1] - CEO Laurel Hurd highlighted a 29% growth in global health care billings and improvements in manufacturing productivity [1] - The company reported benefits from product mix, automation, and a steady pace of orders, indicating resilience in a challenging macro environment [1] Financial Performance - Revenue reached $364.5 million, exceeding analyst estimates of $357.3 million, reflecting a 5.9% year-on-year growth and a 2% beat [6] - Adjusted EPS was $0.61, surpassing analyst estimates of $0.48, marking a 27.1% beat [6] - Adjusted EBITDA stood at $66.2 million, beating analyst estimates of $55.22 million, with an 18.2% margin [6] - The company slightly raised its full-year revenue guidance to $1.38 billion at the midpoint [6] - Operating margin improved to 14.6%, up from 12.3% in the same quarter last year [6] - Market capitalization is reported at $1.51 billion [6] Analyst Insights - Analyst Brian Biros inquired about the factors driving sales outperformance, to which CEO Hurd attributed strength in the health care segment and productive collaboration between Interface and Nora teams [6] - Biros also questioned the upcoming Nora Rubber investments, with Hurd explaining that these investments focus on capacity support, productivity, and innovation [6] - CFO Bruce Hausman discussed the balance between margin improvement and volume growth, indicating a focus on finding an optimal equilibrium [6] - Alexander Paris sought clarification on the education segment's softness, with Hurd noting a decline of less than 3% due to timing, while Hausman linked margin gains to manufacturing efficiencies and favorable product mix [6] - David S. MacGregor probed into the incremental margin potential from automation initiatives, with Hausman emphasizing ongoing efforts to drive efficiencies and expand product lines [6]

Core Insights - Mohawk Industries reported quarterly earnings of $2.67 per share, slightly missing the Zacks Consensus Estimate of $2.68 per share, and down from $2.90 per share a year ago, indicating an earnings surprise of -0.37% [1] - The company achieved revenues of $2.76 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.13% and showing an increase from $2.72 billion year-over-year [2] - Mohawk Industries has outperformed consensus revenue estimates three times over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3] - The current consensus EPS estimate for the upcoming quarter is $2.14 on revenues of $2.67 billion, while for the current fiscal year, the estimate is $9.09 on revenues of $10.73 billion [7] Industry Context - The Textile - Home Furnishing industry, to which Mohawk Industries belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Mohawk's stock performance [5][6]