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The Middleby Corporation (MIDD - Free Report) is poised to benefit from solid demand for its products and solutions, investments in product innovation and technological-advancement actions. A hike in preferences for automated cooking systems, beverage systems and ventless products is likely to prove beneficial for the company in the quarters ahead. Also, a healthy home sales trend, solid backlog levels and sales initiatives are expected to drive its performance in upcoming quarters.
The company believes in strengthening its businesses through the addition of assets. Middleby’s acquisitions of Masterbuilt Holdings and Char-Griller (December 2021) are expected to create strong growth opportunities for it in the residential outdoor cooking products market. Its Imperial Commercial Cooking Equipment buyout (September 2021) is likely to strengthen its product offerings in the commercial kitchen market. Also, its acquisition of Novy (July 2021) has been enhancing its product offerings in the residential built-in cooking market. Acquired assets boosted its sales by 20.7% in the first quarter of 2022.
Middleby remains open to repurchasing common shares opportunistically. In the first three months of 2022, it repurchased common shares worth $155.2 million.
However, MIDD has been dealing with rising costs and expenses over the past few quarters. In the first quarter, the company’s cost of sales and selling, general and administrative expenses increased 37.7% and 33%, respectively, on a year-over-year basis. In the quarters ahead, supply-chain restrictions, labor issues and cost inflation are likely to affect its performance.
Its high-debt profile also poses a concern. Exiting the first quarter, its long-term debt balance remained high at $2,570.1 million, reflecting an increase of 7.7% sequentially. Considering the company’s high debt profile, its cash and cash equivalents of $146.6 million do not seem impressive.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) stock has lost 20.4% compared with the industry’s decline of 12.3%.
Stocks to Consider
Some better-ranked companies from the Zacks Industrial Products sector are discussed below.
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have lost 10.7% in the past three months.
Graphic Packaging Holding Company (GPK - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 7.2%, on average.
In the past 60 days, GPK’s earnings estimates have increased 7.6% for 2022. The stock has gained 1.4% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 1% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 23.3% in the past three months.
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Middleby (MIDD) Displays Bright Prospects, Risks Persist
The Middleby Corporation (MIDD - Free Report) is poised to benefit from solid demand for its products and solutions, investments in product innovation and technological-advancement actions. A hike in preferences for automated cooking systems, beverage systems and ventless products is likely to prove beneficial for the company in the quarters ahead. Also, a healthy home sales trend, solid backlog levels and sales initiatives are expected to drive its performance in upcoming quarters.
The company believes in strengthening its businesses through the addition of assets. Middleby’s acquisitions of Masterbuilt Holdings and Char-Griller (December 2021) are expected to create strong growth opportunities for it in the residential outdoor cooking products market. Its Imperial Commercial Cooking Equipment buyout (September 2021) is likely to strengthen its product offerings in the commercial kitchen market. Also, its acquisition of Novy (July 2021) has been enhancing its product offerings in the residential built-in cooking market. Acquired assets boosted its sales by 20.7% in the first quarter of 2022.
Middleby remains open to repurchasing common shares opportunistically. In the first three months of 2022, it repurchased common shares worth $155.2 million.
However, MIDD has been dealing with rising costs and expenses over the past few quarters. In the first quarter, the company’s cost of sales and selling, general and administrative expenses increased 37.7% and 33%, respectively, on a year-over-year basis. In the quarters ahead, supply-chain restrictions, labor issues and cost inflation are likely to affect its performance.
Its high-debt profile also poses a concern. Exiting the first quarter, its long-term debt balance remained high at $2,570.1 million, reflecting an increase of 7.7% sequentially. Considering the company’s high debt profile, its cash and cash equivalents of $146.6 million do not seem impressive.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) stock has lost 20.4% compared with the industry’s decline of 12.3%.
Stocks to Consider
Some better-ranked companies from the Zacks Industrial Products sector are discussed below.
AZZ Inc. (AZZ - 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 for the last four quarters was 22.3%, on average.
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have lost 10.7% in the past three months.
Graphic Packaging Holding Company (GPK - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 7.2%, on average.
In the past 60 days, GPK’s earnings estimates have increased 7.6% for 2022. The stock has gained 1.4% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 1% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 23.3% in the past three months.