Middleby Corporation: A Buy - Analyst Blog
March 06 2014 - 10:00AM
Zacks
On Mar 6, Zacks Investment Research
downgraded The Middleby Corporation (MIDD) to a
Zacks Rank #2 (Buy) due to the high costs associated with
acquisitions.
Why the
Downgrade?
Middleby recently reported strong
results for the fourth quarter of 2013, beating the Zacks Consensus
Estimate for earnings as well as revenues. Earnings in the quarter
came in at $2.62 per share, up 29% year over year, whereas,
revenues increased 29% year over year to $377.4 million. The
revenue growth was primarily led by contribution from the company’s
acquisitions.
Middleby has been growing on
acquisitions for quite some time. In the last reported quarter, the
company acquired Automatic Bar Controls, Wunder-Bar and Celfrost.
Subsequent to quarter-end, the company acquired Market Forge
Industries. These acquisitions are expected to contribute
significantly to the company’s results in the upcoming quarters.
However, the company has been experiencing a rise in costs related
to the acquisitions. In the fourth quarter, Middleby recorded a
respective increase of $11.0 million and $7.0 million in selling
and distribution and general and administrative expenses, related
to the acquisitions. This hampered the company’s margins.
Additionally, the company’s organic
growth has been noteworthy in the past quarter. In the fourth
quarter, excluding the acquisitions, sales increased 8.6% year over
year.
Following the results, the Zacks
Consensus Estimate for earnings per share increased 3.5% to $10.17
for 2014 while the same for 2015 increased 16.1% to $11.95 over the
past 30 days, reflecting year-over-year growth of 23.8% and 17.5%,
respectively.
With the advent of latest
technologies, Middleby predicts a healthy market share gain in the
near future leveraging its goodwill. The company offers a wide
range of products to its target markets and is constantly
innovating to thwart competition.
Based in Elgin, Ill., Middleby
provides cooking, warming, food preparation and packaging equipment
to the commercial, industrial processing and residential
markets.
Other Stocks to
Consider
Middleby currently has a market
capitalization of $5.5 billion. Other stocks worth a watch in the
industry include DXP Enterprises, Inc. (DXPE),
Kadant Inc. (KAI) and Graco Inc.
(GGG). While DXP Enterprises and Kadant hold a Zacks Rank #1
(Strong Buy), Graco carries a Zacks Rank #2.
DXP ENTERPRISES (DXPE): Free Stock Analysis Report
GRACO INC (GGG): Free Stock Analysis Report
KADANT INC (KAI): Free Stock Analysis Report
MIDDLEBY CORP (MIDD): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Graco (NYSE:GGG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Graco (NYSE:GGG)
Historical Stock Chart
From Jul 2023 to Jul 2024