Leading manufacturer and distributor of floorcovering products, Mohawk Industries Inc. (MHK, Financial) was another top contributor torelative returns in the quarter. Amidst a background of geopolitical tensions and rising inflation, MHK has been able to deliver sales growth, generate strong cash flow, maintain historically low leverage and return capital to shareholders via buybacks. Notably, successful pricing actions continue to offset rapid cost increases and demand remains firm. We are encouraged by strong residential new construction and remodeling spend as well as the recovery in commercial markets. We believe the company will continue to benefit from global and capacity expansion, as well as end-market growth. At current levels, MHK is trading at a 57% discount to our estimate of private market value.
From John Rogers (Trades, Portfolio) Ariel Fund second-quarter 2022 commentary.
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