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Middleby (MIDD) Rides on End-Market Demand Amid Cost Woes
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The Middleby Corporation (MIDD - Free Report) stands to benefit from robust incoming order growth across its segments and a strong backlog level. Improvements in end-market conditions and solid consumer demand are driving the company’s organic sales. Technological enhancement initiatives and product innovations bode well for MIDD’s prospects. Investments in automation and solid product offerings are expected to drive the company’s performance in the quarters ahead.
Middleby’s measures to expand its market share, product offerings and customer base through acquisitions are driving its top line. Recently, the company acquired Icetro, a commercial food service equipment manufacturer that provides ice, soft serve and slush machines. Adding to its growing portfolio of beverage brands, the buyout expands MIDD’s Asian manufacturing capabilities and provides solutions to support customers expanding in international markets. In June, it acquired Proxaut, a provider of Auto Guided Vehicles to the industrial processing companies and the food industry, strengthening its product offerings in the food processing end market. The company also carried out a series of acquisitions last year, namely, Masterbuilt Holdings and Char-Griller, Imperial Commercial Cooking Equipment, and Novy. The acquired assets boosted its sales by 20.7% and 6.2% in first-quarter 2022 and fourth-quarter 2021, respectively.
Middleby’s efforts to add shareholder value is encouraging. In the first three months of 2022, it repurchased common shares worth $155.2 million.
However, escalating costs pose a threat to MIDD’s bottom line. In first-quarter 2022, its cost of goods sold; and selling, general & administrative costs jumped 37.7% and 33%, respectively. Supply-chain restrictions (particularly of component parts) and labor shortages are other issues hampering its operations.
Given Middleby’s international exposure, foreign currency woes are affecting its top line. Foreign exchange headwinds had an adverse impact of 1.2% and 0.1% on sales in first-quarter 2022 and fourth-quarter 2021, respectively. An increase in the value of the U.S. dollar relative to the local currencies of foreign markets might continue affecting the company's top line in the quarters ahead.
In the past three months, this Zacks Rank #3 (Hold) stock has lost 16.8% compared with the industry’s decline of 11.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies within the broader Zacks Industrial Products sector are as follows:
Greif Inc. (GEF - Free Report) sports a Zacks Rank #1 (Strong Buy). GEF has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 5.4% in the past three months.
Titan International flaunts a Zacks Rank #1. TWI has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for TWI’s current-year earnings has been revised upward by 55%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have gained approximately 8.3% in the past three months.
RBC Bearings carries a Zacks Rank #2 (Buy). ROLL has an estimated earnings growth rate of 49.9% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.2%.
RBC Bearings pulled off a trailing four-quarter earnings surprise of 3.4%, on average. The company’s shares have gained 2.6% in the past three months.
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Middleby (MIDD) Rides on End-Market Demand Amid Cost Woes
The Middleby Corporation (MIDD - Free Report) stands to benefit from robust incoming order growth across its segments and a strong backlog level. Improvements in end-market conditions and solid consumer demand are driving the company’s organic sales. Technological enhancement initiatives and product innovations bode well for MIDD’s prospects. Investments in automation and solid product offerings are expected to drive the company’s performance in the quarters ahead.
Middleby’s measures to expand its market share, product offerings and customer base through acquisitions are driving its top line. Recently, the company acquired Icetro, a commercial food service equipment manufacturer that provides ice, soft serve and slush machines. Adding to its growing portfolio of beverage brands, the buyout expands MIDD’s Asian manufacturing capabilities and provides solutions to support customers expanding in international markets. In June, it acquired Proxaut, a provider of Auto Guided Vehicles to the industrial processing companies and the food industry, strengthening its product offerings in the food processing end market. The company also carried out a series of acquisitions last year, namely, Masterbuilt Holdings and Char-Griller, Imperial Commercial Cooking Equipment, and Novy. The acquired assets boosted its sales by 20.7% and 6.2% in first-quarter 2022 and fourth-quarter 2021, respectively.
Middleby’s efforts to add shareholder value is encouraging. In the first three months of 2022, it repurchased common shares worth $155.2 million.
However, escalating costs pose a threat to MIDD’s bottom line. In first-quarter 2022, its cost of goods sold; and selling, general & administrative costs jumped 37.7% and 33%, respectively. Supply-chain restrictions (particularly of component parts) and labor shortages are other issues hampering its operations.
Given Middleby’s international exposure, foreign currency woes are affecting its top line. Foreign exchange headwinds had an adverse impact of 1.2% and 0.1% on sales in first-quarter 2022 and fourth-quarter 2021, respectively. An increase in the value of the U.S. dollar relative to the local currencies of foreign markets might continue affecting the company's top line in the quarters ahead.
In the past three months, this Zacks Rank #3 (Hold) stock has lost 16.8% compared with the industry’s decline of 11.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies within the broader Zacks Industrial Products sector are as follows:
Greif Inc. (GEF - Free Report) sports a Zacks Rank #1 (Strong Buy). GEF has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 5.4% in the past three months.
Titan International flaunts a Zacks Rank #1. TWI has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for TWI’s current-year earnings has been revised upward by 55%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have gained approximately 8.3% in the past three months.
RBC Bearings carries a Zacks Rank #2 (Buy). ROLL has an estimated earnings growth rate of 49.9% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.2%.
RBC Bearings pulled off a trailing four-quarter earnings surprise of 3.4%, on average. The company’s shares have gained 2.6% in the past three months.