Mini R&R Deep Dive Sheds Light on Cycle Timing + MHK CFO/IR Dinner Takes

研报英文原文证据摘录

Mini R&R Deep Dive Sheds Light on Cycle Timing + MHK CFO/IR Dinner Takes

Industry Update Equity Research

Executive Summary -- Near Term = Bad, Long Term = The Recovery Could

be Strong!

We're kicking off the first full day of our Chicago industrial conference with a mini-refresh from our

housing repair/remodel data repository. On balance, our analysis leaves us cautious on the near term,

optimistic on the long term. For investors, a few implications:

• It's virtually impossible to build a 2H26 bull case for renovation spend; to that end, this presents

challenges for investors seeking beta, since weak demand (against volatile raws) could drive

unfavorable near-term price/cost dynamics.

• But long-term investors take heart: we see plenty of structural reasons to be bullish, all of which we

break down below... including eventual mean-reversion for per cap home spend & the aging home

stock. And while we've fielded our share of haranguing about deteriorating home equity, the data

clearly illustrates that homeowners are still sitting on a veritable gold mine of untapped home price

appreciation. Eventually, these dynamics should unlock real fundamental value—and when they do,

we expect it's going to be up & to the right!

With respect to stock calls, here's how we're positioning:

• It's still too early to rotate into beta; this makes it hard to underwrite stocks like MHK, even against

what we see as best-in-class self-help initiatives. But longer-term investors should not count MHK

out; when fundamentals turn, this could be the single best way to invest behind repair/remodel

recovery, w/ +DD% incremental margins across all three segments (something that was reinforced

in our MHK CFO/IR dinner last night).