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Middleby (MIDD) Braves Headwinds on Robust Growth Drivers

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We issued an updated research report on premium diversified machinery company, The Middleby Corporation (MIDD - Free Report) on May 12.

Existing Scenario

Middleby’s first-quarter 2017 earnings and revenues improved on a year-over-year basis. Upside in quarterly revenues was stemmed by improved Commercial Foodservice Equipment segment sales. The company believes that solid demand for innovative products would continue to boost its top-line performance in the quarters ahead.

In addition, lower costs and greater operational efficacy are anticipated to enhance near-term profitability. Also, Middleby has been making concerted efforts to expand inorganically worldwide. For instance, the strategic buyouts of Emico Automated Bakery Equipment Solutions and Follett Corporation (May 2016) are currently reinforcing the company’s beverage businesses. The recent acquisition of Burford Corporation (May 2017) is expected to drive the performance of Middleby’s existing bakery brands.

Over the last 30 days, the Zacks Consensus Estimate for the stock has been revised upward for both 2017 and 2018, indicating positive market sentiments. Notably, this Zacks Rank #3 (Hold) stock currently holds a Momentum Style Score ‘A’ and Growth Style Score ‘B’.

However, on the other hand, we note that Middleby’s shares recorded a loss of 1.87%, as against 5.60% growth recorded by the Zacks categorized Machinery-General Industrial industry, over the last three-month period.

Headwinds such as stiff industry rivalry, a stronger U.S. dollar or input price inflation are likely to curtail near-term growth.

Stocks to Consider

Some better-ranked stocks in the industry are listed below:

Caterpillar Inc.‘s (CAT - Free Report) average earnings surprise for the trailing four quarters was a positive of 40.25%. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. (AIT - Free Report) currently sports a Zacks Rank #1. It generated an average positive earnings surprise of 9.78% over the last four quarters.

Avery Dennison Corporation (AVY - Free Report) holds a Zacks Rank #2 (Buy) and delivered an average positive earnings surprise of 5.53% in the past four quarters.

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