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Middleby Buys EVO America, Expands Ventless Cooking Business

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The Middleby Corporation (MIDD - Free Report) announced that it acquired Portland, OR-based EVO America, Inc. Financial terms of the transaction were not disclosed.

It’s worth mentioning here that the company’s stock price increased roughly 1.3% at the close of the trading session on Dec 31, 2018. The closing price on that day was $102.73.

EVO America is primarily engaged in manufacturing equipment related to ventless cooking for use in the commercial foodservice industry. EVO America generates approximately $8 million in revenues annually.

Details of Buyout

Middleby will integrate EVO America with its Commercial Foodservice Equipment Group. This buyout will expand the company’s product offerings in the ventless cooking end market as well as help in expanding its geographical footprint.

It is worth mentioning here that Middleby’s Commercial Foodservice Equipment Group primarily engages in manufacturing cooking equipment — including proofing ovens, conveyor ovens, induction cooking and speed cooking ovens, and others — for institutional kitchens and restaurants. Leading equipment brands under this segment are CookTek, Lang, MPC, Combi, Southbend, Wells and PrefectFry. This segment accounted for roughly 66.1% of the company’s total revenues in third-quarter 2018.

Snapshot of Middleby’s Inorganic Initiatives

We believe that the above-mentioned transaction is consistent with Middleby’s policy of acquiring businesses to gain access to new customers, regions and product lines.

Prior to the EVO America buyout, Middleby added Canada-based Crown Food Service Equipment — manufacturer of steam cooking equipment for use in the commercial foodservice industry — to its portfolio. Further, Middleby completed the $1-billion buyout of Taylor Company in June 2018. This acquisition has been fortifying Middleby’s position in the global commercial foodservice industry.

In the first nine months of 2018, Middleby used approximately $1,147.7 million for making acquisitions (net of cash acquired). Further, acquired assets added roughly $266.1 million to the company’s revenues.

Zacks Rank & Stocks to Consider

With a market capitalization of nearly $5.7 billion, Middleby currently carries a Zacks Rank #3 (Hold). Focus on innovation of products, lower corporate taxes and synergistic gains from acquired assets will be advantageous for the company in the quarters ahead. However, the soft AGA Rangemaster business, high restructuring and interest expenses, and unfavorable movements in foreign currencies might continue to harm its performance.

In the past 60 days, Middleby’s earnings estimates for 2019 have been increased by three firms and lowered by two. Currently, the Zacks Consensus Estimate is pegged at $6.93 for 2019, reflecting decline of 0.1% from the 60-day ago tally.

The Middleby Corporation Price and Consensus

 

The Middleby Corporation Price and Consensus | The Middleby Corporation Quote

In the past three months, shares of Middleby have declined 17.6% versus the industry’s fall of 16.7%.





Some better-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , EnPro Industries, Inc. (NPO - Free Report) and Luxfer Holdings PLC (LXFR - Free Report) . All these stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for DXP Enterprises and Luxfer Holdings improved for 2019 while remained stable for EnPro Industries. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 23.64% for EnPro Industries and 60.61% for Luxfer.

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