I took a decently in-depth look at Mohawk (MWK) several weeks ago, and wanted to share a few cautions now that they’ve reported Q4.
In Q3, they guided to a $175m - 185m range for 2020 revenue: https://ir.mohawkgp.com/news-releases/news-release-details/m…
…but raised the range to $180m - 190m in their Feb 4 presentation (page 18): https://ir.mohawkgp.com/static-files/b5122a4a-139b-4645-820b…
So even after raising, the 185.7m they hit was not technically a miss, but most companies easily beat the top end of their range. Really strange to me that MWK would be this aggressive (to raise the range even after the year was over), and that gives me reason to doubt they will exceed their 380m guide for 2021, even though they keep bumping it up.
Also, the gross margins leave little room for error. And I don’t really know how to value this company. Maybe bottom line eventually – hard to know when/what will materialize.
They also have a line on the Operating Expenses called “Change in fair value of contingent earn-out liabilities.” I’d suggest looking into that.
Klay points out their creditors are not giving them much love: https://discussion.fool.com/the-earning-report-is-good-except-fo…
Anyway, interesting company, but too many flags for me. I just wanted to provide a word of caution – this company is not nearly as proven as several of the more popular favorites here. I could say this for many others as well of course (including UPST which I have a small position in), but Mohawk happens to be the one I spent some time on.
I think the important thing is to keep these more speculative positions small. I’m not trying to tell anyone how to invest – make your own decisions. But this board is a valuable resource. If you’re invested in a growth company this board collectively ignores, I suggest repeatedly making your case here. If you can’t convince us, there might be a good reason.
Bear