Management at Mohawk Industries
It hasn't been all bad, though. The commercial business, for example, has remained positive. But Mohawk expects that situation to change soon as the credit markets have tightened. Allowing your rug to become more threadbare, after all, is always an option.
There was a 29% decline in annualized housing starts in the first quarter, down to approximately 1 million homes. Moreover, annualized housing starts decreased to fewer than 950,000 starts for last month. Rising costs have also pushed manufacturers to raise prices to help fight off margin erosion. And Mohawk says more price increases may be on the way.
On the bright side, with the sector off and the competition still reeling, Mohawk has been moving to sweep up more market share. It's continued to pay down its debt, modernize facilities, and reduce expenses. So although the stock has dropped by roughly a third over the past nine months, that may just mean it offers a better value for investors looking to play a recovery in housing. In any event, at 12 times next year's earnings, Mohawk offers a more attractive opportunity to that of troubled peer Armstrong World Industries
Timely acquisitions, such as the purchase of its Unilin laminate-flooring segment, have given Mohawk a firm footing in the industry, in league with Berkshire Hathaway's
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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool, which has a disclosure policy, is a Berkshire Hathaway shareholder.