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Middleby Gains From Product Innovations & Buyouts, Risks Persist
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The Middleby Corporation (MIDD - Free Report) is poised to benefit from its focus on launching new products and upgrading existing ones per the industry trend. As for innovation, over the past year, the company introduced several products including MP Equipment, Blodgett ImVection, PIZZABOT and others. It is also gaining market share in new and large product categories, including beverage and ice.
The company remains focused on acquiring businesses to gain new customers and access new regions and product lines. In February 2024, it acquired Germany-based GBT GmbH Bakery. The buyout complemented Middleby’s existing bakery brands and strengthened its European presence in large-scale baking. Its acquisition of Trade-Wind Manufacturing in August 2023 strengthened its portfolio of indoor and outdoor residential cooking products.
Also, the buyout of TERRY Water Treatment Solutions in July 2023 bolstered the company’s commercial foodservice operations. In the second quarter of 2024, acquisitions had a positive impact of 0.3% on its sales growth.
Middleby’s sound liquidity position adds to its strength. It exited the second quarter with cash and cash equivalents of $459.5 million, higher than the current maturities of long-term debt of $44.3 million. This implies that MIDD has sufficient cash to meet its current debt obligations.
MIDD Stock’s Price Performance
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 2.3% against the industry’s 0.3% decline.
However, lower demand for residential kitchen products due to weakness in the housing market is affecting the performance of the Residential Kitchen Equipment Group segment. This is reflected in the segment’s results, which declined 6.2% year over year in the second quarter of 2024. Also, softness in the restaurant industry, due to declining traffic and high wages, is affecting the demand for the company's products within the Commercial Foodservice Equipment Group segment. The segment’s revenues declined 4.1% year over year in the second quarter.
High debt level also remains a concern for MIDD. Exiting the second quarter, its long-term debt remained high at $2.36 billion. Also, the stock looks more leveraged than the industry. Its long-term debt/capital ratio is currently 0.41, higher than 0.33 of the industry.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
FLS delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2024 earnings has increased 3.8%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.1%.
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Middleby Gains From Product Innovations & Buyouts, Risks Persist
The Middleby Corporation (MIDD - Free Report) is poised to benefit from its focus on launching new products and upgrading existing ones per the industry trend. As for innovation, over the past year, the company introduced several products including MP Equipment, Blodgett ImVection, PIZZABOT and others. It is also gaining market share in new and large product categories, including beverage and ice.
The company remains focused on acquiring businesses to gain new customers and access new regions and product lines. In February 2024, it acquired Germany-based GBT GmbH Bakery. The buyout complemented Middleby’s existing bakery brands and strengthened its European presence in large-scale baking. Its acquisition of Trade-Wind Manufacturing in August 2023 strengthened its portfolio of indoor and outdoor residential cooking products.
Also, the buyout of TERRY Water Treatment Solutions in July 2023 bolstered the company’s commercial foodservice operations. In the second quarter of 2024, acquisitions had a positive impact of 0.3% on its sales growth.
Middleby’s sound liquidity position adds to its strength. It exited the second quarter with cash and cash equivalents of $459.5 million, higher than the current maturities of long-term debt of $44.3 million. This implies that MIDD has sufficient cash to meet its current debt obligations.
MIDD Stock’s Price Performance
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 2.3% against the industry’s 0.3% decline.
However, lower demand for residential kitchen products due to weakness in the housing market is affecting the performance of the Residential Kitchen Equipment Group segment. This is reflected in the segment’s results, which declined 6.2% year over year in the second quarter of 2024. Also, softness in the restaurant industry, due to declining traffic and high wages, is affecting the demand for the company's products within the Commercial Foodservice Equipment Group segment. The segment’s revenues declined 4.1% year over year in the second quarter.
High debt level also remains a concern for MIDD. Exiting the second quarter, its long-term debt remained high at $2.36 billion. Also, the stock looks more leveraged than the industry. Its long-term debt/capital ratio is currently 0.41, higher than 0.33 of the industry.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2024 earnings has increased 3.8%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.1%.