Mohawk Industries leads S&P on Friday after record sales report

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Mohawk Industries (NYSE:MHK +8.4%) marked strong gains on Friday, moving against the broader downward trend for the market.

The Calhoun, Georgia-based conglomerate was one of just four stocks in the S&P 500 rising late in Friday’s trading and the only stock in the index rising by more than 1%.

The impetus for the move was an encouraging earnings release that reflected record first quarter sales, strong pricing power, and a full-year forecast well above the Wall Street consensus.

CEO Jeffrey Lorberbaum said the company instituted “unprecedented” price increases to contend with inflation. Even still, demand for flooring, counters, and carpeting soared on resilient home remodeling trends. In fact, he noted the company is expanding in order to keep up with demand despite the elevated prices.

“Market conditions for flooring remain favorable, even as governments raise interest rates to combat inflation,” Lorbenbaum said. “Remodeling should remain strong with rising home equity and buyers of existing homes still completing long-term projects that they initiated over the past few years.”

He added that demographic trends in terms of millennials forming households should sustain that trend for years to come. The company is also able to benefit from its provision of alternatives to costly tile imports, sidestepping supply chain issues. Additionally, the company announced steps to increase capacity in Brazil and Mexico to further protect against supply chain problems.

Overall, the strong pricing power, sustained demand trends, and execution appear to be engendering a confidence in the stock not widely observable elsewhere in Friday’s S&P action.

Shares surged over 8% shortly before the close of the day, week, and month. The action accelerated from a flat month of April and a decline of nearly 30% year to date seen prior to the release.

Dig into the details of the quarterly report.