Stock Analysis

We Might See A Profit From Mohawk Group Holdings, Inc. (NASDAQ:MWK) Soon

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NasdaqCM:ATER
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Mohawk Group Holdings, Inc. (NASDAQ:MWK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Mohawk Group Holdings, Inc., together with its subsidiaries, operates as a technology-enabled consumer products company in the United States and internationally. With the latest financial year loss of US$59m and a trailing-twelve-month loss of US$37m, the US$986m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Mohawk Group Holdings' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Mohawk Group Holdings

According to the 6 industry analysts covering Mohawk Group Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$1.2m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqCM:MWK Earnings Per Share Growth March 1st 2021

Given this is a high-level overview, we won’t go into details of Mohawk Group Holdings' upcoming projects, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Mohawk Group Holdings currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Mohawk Group Holdings' case is 79%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Mohawk Group Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Mohawk Group Holdings, take a look at Mohawk Group Holdings' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

  1. Valuation: What is Mohawk Group Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Mohawk Group Holdings is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Mohawk Group Holdings’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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