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Middleby (MIDD) on Buyout Spree, Adds Masterbuilt & Char-Griller

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The Middleby Corporation (MIDD - Free Report) yesterday announced that it completed the acquisition of Masterbuilt Holdings LLC for $385 million in cash. The other party to the transaction was Dominus Capital, L.P. The deal to the buyout was announced by Middleby on Dec 6, 2021.

Concurrently, Middleby communicated that it purchased Atlanta-based Char-Griller.

Shares of Middleby gained 1.78% yesterday, ending the trading session at $195.17.

Inside the Headlines

Based in Atlanta, GA, Masterbuilt specializes in manufacturing and supplying residential outdoor cooking appliances. Products offered include smokers, fryers, ceramic and traditional grills, charcoal, and other accessories. These are sold under the brand names Kamado Joe and Masterbuilt. For 2021, Masterbuilt is anticipated to generate net sales of $250 million.

The addition of Masterbuilt’s strong product line, solid innovative capabilities, and distribution network to Middleby’s portfolio will boost the latter’s growth opportunities in the residential outdoor end market. The acquisition will complement Middleby’s cooking brands such as Viking, Lynx, Josper and EVO.

The acquisition value of $385 million is financed with available cash and a revolving credit facility.

Notably, Middleby’s Char-Griller buyout will also enhance the former’s presence in the residential outdoor cooking market. The solid customer base of Char-Griller along with its innovation and distribution capabilities, and solid product line will be beneficial for Middleby.

Char-Griller specializes in making and distributing gas and charcoal-based outdoor cooking products for residential purposes. Revenues for Char-Griller are anticipated to total $150 million in 2021.

Middleby’s Other Buyout Moves

Middleby focuses on acquiring businesses to strengthen its product lines, solidify presence across regions and expand its customer base. Acquired assets boosted Middleby’s sales by 5.1% in the third quarter of 2021.

Middleby added Imperial Commercial Cooking Equipment to its portfolio in September 2021, while acquiring Novy in July 2021. Also, the Wild Goose Filling and the United Foodservice Equipment Group buyouts were completed in December 2020. Also, RAM Fry Dispensers was acquired in January 2020 and Deutsche Beverage was bought in March 2020.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $10.7 billion, Middlebycurrently carries a Zacks Rank #3 (Hold). Growth opportunities in its segments, gains from buyouts, and healthy liquidity are advantageous for the company. Supply-chain-related woes, labor problems and high raw material costs are worrisome for the company.

In the past three months, Middleby’s shares have gained 12.2% compared with the industry’s growth of 1.7%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $7.91 for 2021 and $9.68 for 2022, reflecting declines of 5.3% and 0.3% from the respective 60-day-ago figures. The consensus estimate of $2.08 for fourth-quarter 2021 has declined 13% over the past 60 days.

The Middleby Corporation Price and Consensus

 

The Middleby Corporation Price and Consensus

The Middleby Corporation price-consensus-chart | The Middleby Corporation Quote

Stocks to Consider

Three better-ranked stocks in the industry are discussed below.

Helios Technologies, Inc. (HLIO - Free Report) presently sports 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 reported quarter was 30.49%. The same in the last four quarters was 37.54%, on average.

In the past 60 days, Helios’ earnings estimates have increased 7.9% for 2021 and 9.6% for 2022. HLIO’s shares have gained 23.8% in the past three months.

Ingersoll Rand Inc. (IR - Free Report) reported better-than-expected results in the last reported quarter, with earnings surpassing estimates by 23.91%. Its earnings surprise in the last four quarters was 19.78%, on average. The company presently carries a Zacks Rank #2 (Buy).

Ingersoll’s earnings estimates increased 11.7% for 2021 and 7.9% for 2022 in the past 60 days. IR’s shares have increased 19.1% in the past three months.

Welbilt, Inc.’s (WBT - Free Report) results in the last reported quarter were impressive, with earnings surpassing estimates by 40.00%. Its last four-quarter average earnings surprise was 172.50%. The company presently carries a Zacks Rank #2.

Welbilt’s earnings estimates have increased 3.3% for 2021 and 8.4% for 2022 in the past 60 days. WBT’s shares have gained 1.1% in the past three months.