MHK | Long Setup | Weekly triangle | Sep 10, 2025📌MHK | Long Setup | Weekly triangle + cost reset & buybacks | Sep 10, 2025
🔹 Thesis Summary
Mohawk is compressing inside a multi-year symmetrical triangle while management executes a cost reset and buybacks. At ~$135, the stock trades at a discount to home-improvement peers; a weekly close through the down-trend unlocks rerating potential into 2026.
🔹 Trade Setup
Bias: Long
Entry Zone: $132–$136 (initial scale) — Add-on: weekly close ≥ $138–$140
Stop Loss: $124 (weekly close below triangle support) — Hedge level: $95 (defensive stop/puts if breached)
Sizing / Risk: Chart risk box → Max absolute $3.15M, Relative $1.77M (align to your risk cap; target ≥3:1 R:R to TP2)
Take-Profits:
TP0 (10% trim): $138–$139 (first supply retest)
TP1: $150 (2024 swing high) — ~1.6 R:R from $134
TP2: $206 (2017–2021 shelf) — ~7.2 R:R
TP3: $230–$246 (measured move / extension)
Max Target: $333–$496 (cycle objective; ROI potential ~324% on full extension)
🔹 Narrative & Context
Structure: Price has coiled for years between ~$98–$164 (52-wk range $98–$161). Higher lows since 2023 and tightening volatility favor a directional move.
Operational reset: 2025 restructuring benefits targeted at $100M; $500M new repurchase authorization (Q2 2025) with conservative leverage (~1.1× exiting 2024).
Tariff headwind but addressed: LVT duties (~$50M annualized) are being offset via price/mix and supply shifts.
Flow of news: Q2’25 EPS $2.34 on flat ~$2.8B sales; FCF $125M. Leadership transition underway; cadence of 10-Q/8-K updates supports transparency.
🔹 Valuation & Context (Pro Metrics, Framed Simply)
Forward P/E ≈ 12.8× vs LOW 20.1× / HD 25.5× / TILE 14.2× / RH 16.3× → Cheaper than big-box peers and near specialty medians → Market pricing cyclical risk → If margins normalize, multiple can expand alongside earnings.
P/FCF ≈ 17.5× (FCF Yield ~5.7%) vs LOW ~19.5×, HD ~29×, SHW ~41× → More cash per dollar paid → Supports buybacks and cushions downside during slow demand.
EPS Next Y +16.9% vs peer medians ~10–13% → Operating improvements visible → Aligns with a breakout thesis.
Balance-sheet risk: Net leverage ~1.1× → Conservative → Flexibility to keep investing and repurchasing through the cycle.
🔹 Contrarian Angle (Your Edge)
Street targets cluster around $136 with mixed Buy/Hold stances. The market is anchoring to soft housing turnover. The chart shows multi-year accumulation into a triangle apex while fundamentals inflect (cost-outs + buybacks). We see a credible path to $150 near-term and $206–$246 into 2026, with a long-cycle stretch toward $333.
🔹 Risks
Prolonged housing softness / R&R slowdown.
Tariff or input-cost escalation compresses margins.
Execution risk on restructuring and leadership transition.
🔹 Macro Considerations
Watch U.S. mortgage rates & housing starts, USD (import costs), and cyclical factor flows. A broad risk-off in consumer cyclicals could delay breakout timing; conversely, easing rates or improving housing turnover accelerates the move.
🔹 Bottom Line
A discounted multiple, tangible cost actions, and repurchases create an asymmetric long with defined risk at $124. A weekly close above $138–$140 is the trigger; $150 / $206 are the first meaningful checkpoints for a rerating.
🔹 Forward Path
If this post gains traction, I’ll follow up with: weekly structure updates, breakout confirmation levels, and revisions to targets as margins and volumes evolve.
👉 Like & Follow for structured ideas, not signals. I post high-conviction setups here before broader narratives play out. If this hits 🔟 likes, I’ll follow up!
⚠️ Disclaimer: This is not financial advice. Do your own research. Charts and visuals may include AI enhancements.
🔹 Footnote
Forward P/E: Price divided by expected earnings over the next 12 months. Lower = cheaper relative to profits.
P/FCF (Price-to-Free-Cash-Flow): Price vs. the cash left after investments. A measure of efficiency.
FCF Yield: Free cash flow per share ÷ price per share. Higher = more cash returned for each dollar invested.
ROE (Return on Equity): Net income ÷ shareholder equity. Shows management efficiency with investor capital.
ROIC (Return on Invested Capital): Net income ÷ all invested capital (equity + debt). A purer profitability gauge.
Debt/Equity: Debt divided by equity. <1 usually means balance sheet is conservative.
R:R (Risk-to-Reward): Ratio of expected upside vs. downside. 3:1 = you risk $1 to make $3.
