Mohawk Group Holdings (NASDAQ:ATER), the tech-driven consumer goods conglomerate, just capped off its 2020 full year with an impressive fourth-quarter earnings report. With strong top-line growth, improved profitability, and boosted guidance, Mohawk's rearview is something management can certainly be proud of.

But let's take a look at what Mohawk Group investors should be excited about moving forward. 

Growth ahead for Mohawk

In 2020, Mohawk Group finished the year with $185.7 million in revenue, up 62% from the year before. To add fuel to Mohawk's already impressive fire, management is guiding for 2021 revenue to grow by between 88% and 105%. While it might sound like a nice acceleration, it's worth bearing in mind that this growth isn't free. 

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For any readers who aren't familiar, Mohawk Group is a mini-conglomerate that acquires small consumer goods brands at a purchase price typically around three or four times operating income. After Mohawk Group acquires a brand, it then helps that brand increase sales volume across various e-commerce platforms, primarily Amazon, through different discounting and marketing strategies initiated by Mohawk's e-commerce engine. 

The boosted revenue guidance for 2021 is largely due to Mohawk's recent spending spree. In the fourth quarter, Mohawk Group spent more than $100 million in cash and stock to acquire five separate e-commerce brands. This included $48 million on Healing Solutions, the owner of an extensive essential oils and wellness portfolio.

On top of these acquisitions, management appointed a new head of corporate development in Europe and North America, while simultaneously announcing the purchase of its first European brand called Photo Paper Direct, a leading U.K. office supplies seller.  

However, there's a give and take with these acquisitions. For each brand Mohawk acquires, it also divvies out cash and stock to the company it's incubating. While the top-line growth is eye-popping at first glance, shareholders should expect dilution in the future. The best way investors can account for this dilution is by analyzing Mohawk's growth on a per-share basis. 

Tidying up the edges

Since Mohawk Group was founded in 2014, it's still a relatively young business. And with any young business, there are often some growing pains.

Prior to this quarter, Mohawk's business looked a little out of control. From stock issuance to high-interest debt, it felt like the company was striving for growth at any cost. However, this quarter management helped put some of those worries to rest. 

Marking the end of its fiscal year, Mohawk Group appointed Arturo Rodriguez to the CFO role. Rodriguez has been serving as Mohawk's Senior Vice President of finance since 2017, and prior to joining Mohawk, served as acting CFO at France-based gaming company Atari SA, and as Chief Accounting Officer at Piksel, a workflow provider for the broadcasting industry. As Mohawk continues growing through acquisitions, Rodriguez should serve as a valuable addition thanks to his experience and expertise. 

To accompany the appointment of its new CFO, Mohawk Group also mentioned its intent to refinance all of its outstanding debt. Mohawk Group currently has several lenders, each with their own respective terms, including a 10% rate on a revolving credit line. This refinancing would throttle down all of the debt to one institutional lender and would be payable at 8% annually over the next three years. While this hasn't officially been closed yet and the interest rate is still fairly high, it's a step in the right direction for Mohawk Group. 

What could go wrong?

As with any emerging growth company, there are going to be hiccups, and Mohawk Group is no exception. Mohawk Group employs a strategy that requires significant up-front investment. Once it acquires a brand, the brand typically runs at a loss until its products generate enough ratings and reviews to sell organically. If competition in this data-driven, consumer goods space heats up, reaching cruising altitude for each product could become more costly for Mohawk Group. 

While there are certainly some concerns worth paying attention to, there's also lots to like about Mohawk's unique e-commerce strategy, and the market seems to have recognized that. Over the last 12 months, Mohawk Group's stock has seen a rise of more than 1,400%! So, despite the potential growth ahead, it's fairly unlikely that shareholders will see returns like that two years in a row. However, by no means does that make it a bad investment. Mohawk Group remains an attractive small-cap stock with a long runway of growth ahead of it, and shareholders should be excited about its future. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.