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Middleby (MIDD) Up 13.3% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Middleby (MIDD - Free Report) . Shares have added about 13.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Middleby due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Middleby Q3 Earnings Beat, Revenues Decrease Y/Y

Middleby reported third-quarter 2023 adjusted earnings (excluding 34 cents from non-recurring items) of $2.35 per share, which surpassed the Zacks Consensus Estimate of $2.29. The bottom line increased 7.8% year over year due to lower costs.

Net sales of $980.7 million missed the Zacks Consensus Estimate of $1020.6 million. The top line dipped 1.2% year over year. Organic revenues in the reported quarter decreased 1.4%. Acquired assets boosted sales by 1.8%, while movements in foreign currencies had a positive impact of 1.3%.

Segmental Results

Sales from the Commercial Foodservice Equipment Group (representing 64.6% of the net sales) were $634.01 million, up 2.3% year over year. Our estimate for Commercial Foodservice revenues in the third quarter was $635.9 million. Organic sales in the reported quarter inched up 0.2%. Buyouts boosted sales by 1.3%, while foreign-currency translation had a positive impact of 0.9%.

Sales from the Residential Kitchen Equipment Group (representing 18.4% of the reported quarter’s net sales) totaled $179.98 million, down 18.6% year over year. Results were hurt by inventory de-stocking in the residential business and housing market weakness. Our estimate for segmental revenues was $211.3 million. Organic sales in the quarter under review dropped 21%. Favorable foreign currency movements boosted sales by 2.1%.

Sales from the Food Processing Equipment Group (representing 17% of the reported net sales) summed $166.67 million, up 9.4% year over year. Our estimate for Food Processing revenues was pegged at $173.5 million. Organic sales in the third quarter increased 1.2%. Acquisitions boosted sales by 6%, while foreign currency movements had a favorable impact of 2.2%.

Margin Profile

In the third quarter, Middleby’s cost of sales decreased 3.6% year over year to $605.33 million. Gross profit augmented 2.8% to $375.32 million. Gross margin increased to 38.3% from 36.8% in the year-ago quarter.

Selling, general and administrative expenses decreased 2.4% year over year to $196.43 million. Segment operating income in the third quarter rose 7.9% year over year to $174.44 million. Operating margin increased to 17.8% from 16.3% in the year-ago period.

Balance Sheet and Cash Flow

Exiting the third quarter, Middleby had cash and cash equivalents of $167.19 million compared with $162 million at the end of December 2022. Long-term debt was $2.54 billion at the end of the third quarter compared with $2.68 billion at 2022-end.

In the first nine months of 2023, Middleby generated net cash of $373.10 million from operating activities compared with $173.45 million in the year-ago period. Capital expenditure totaled $69.65 million compared with $50.91 in the year-ago period. Free cash flow was $303.46 million in the first nine months of 2023 compared with $122.54 million in the year-ago period.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -5.05% due to these changes.

VGM Scores

Currently, Middleby has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Middleby has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Middleby belongs to the Zacks Manufacturing - General Industrial industry. Another stock from the same industry, Barnes Group (B - Free Report) , has gained 21.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Barnes Group reported revenues of $360.99 million in the last reported quarter, representing a year-over-year change of +14.7%. EPS of $0.19 for the same period compares with $0.49 a year ago.

Barnes Group is expected to post earnings of $0.35 per share for the current quarter, representing a year-over-year change of -32.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -14%.

Barnes Group has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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