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Middleby (MIDD) to Buy Masterbuilt, Expand Product Offerings

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The Middleby Corporation (MIDD - Free Report) recently entered into a contract with Dominus Capital, L.P to acquire Masterbuilt Holdings LLC. The deal, valued at $385 million in cash, is likely to be financed through the company’s existing senior credit facility.

Middleby’s shares gained 2.1% yesterday to eventually close the trading session at $175.75.

Inside the Headlines

Based in Atlanta, GA, Masterbuilt is a leading designer, manufacturer and supplier of outdoor cooking appliances. Products offered by the company include smokers, fryers, ceramic and traditional grills, charcoal and other accessories. These are sold under the brand names Kamado Joe and Masterbuilt. In 2021, it is anticipated to generate net sales of $250 million.

The latest buyout is in sync with Middleby’s policy of acquiring businesses to expand its market share and customer base. The inclusion of Masterbuilt’s strong product line, coupled with its solid innovative capabilities and distribution network, is expected to boost Middleby’s product offerings in the residential outdoor end market. As noted, the acquisition will complement Middleby’s cooking brands such as Viking, Lynx, Josper and EVO.

The buyout is anticipated to be completed in December 2021, subject to certain regulatory approvals.

Other Inorganic Moves

Middleby’s acquisitions of Imperial Commercial Cooking Equipment (September 2021) and Novy (July 2021) are expected to strengthen its product offerings in the commercial kitchen and residential built-in cooking end markets, respectively. Also, its Wild Goose Filling buyout (December 2020) has been strengthening its growth opportunities in the canned beverages market. The United Foodservice Equipment Group acquisition (December 2020) has been boosting its foodservice equipment offerings in China.

Acquired assets boosted Middleby’s sales by 2.2% and 5.1% in the second and third quarters of 2021, respectively.

Zacks Rank, Price Performance and Earnings Estimates

Middleby, with a market capitalization of $9.6 billion, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from increasing orders for its product, robust backlog, acquired assets and a focus on innovation in the quarters ahead. However, issues related to supply chain and labor, along with high raw material costs, might continue to affect its near-term performance.

Zacks Investment ResearchImage Source: Zacks Investment Research

In the past three months, its shares have lost 0.2% compared with the industry’s decline of 4.8%.

The Zacks Consensus Estimate for Middleby’s earnings is pegged at $7.88 for 2021 and $9.58 for 2022, reflecting declines of 6.2% and 2.2% from the respective 30-day-ago figures.

Key Picks

Some better-ranked companies from the same space are discussed below.

Helios Technologies, Inc. (HLIO - Free Report) presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise in the last four quarters was 37.54%, on average.

In the past 30 days, Helios’ earnings estimates have increased 7.9% for 2021 and 9.8% for 2022. Its shares have gained 17.5% in the past three months.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 26.71%, on average.

Applied Industrial’s earnings estimates have been stable for fiscal 2022 (ending June 2022) and fiscal 2023 (ending June 2023) in the past 30 days. Its shares have gained 16.7% in the past three months.

Welbilt, Inc. (WBT - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 172.50%, on average.

Welbilt’s estimates for 2021 have been stable for 2021 and 2022 in the past 30 days. Its shares have gained 0.9% in the past three months.