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Forget Middleby, Buy These 3 Industrial Stocks Instead
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Industrial Products currently occupies the top position among the 16 broad Zacks sectors. Month-to-date, it has recorded 2.7% gain. Though there are many investment-friendly options in the sector, it also has stocks that currently have poor investment appeal and preferably should be avoided by investors seeking exposure in the space.
Once such stock is The Middleby Corporation (MIDD - Free Report) . The Elgin, IL-based industrial machinery company primarily engages in the production and distribution of foodservice equipments for the commercial, industrial processing and residential markets.
In the past year, Middleby’s share price has declined roughly 19.1% against 4.9% growth of the Industrial Products sector and 6.5% increase of the industry (comprising companies dealing in general industrial machineries) it belongs to.
Notably, the stock has lost 21.3% since the beginning of 2018. Year to date, the company has announced two earnings results, including in-line numbers for the fourth quarter of 2017 and weaker-the-expected results for the first quarter of 2018.
Decline in organic revenues, in each of its three segments, as well as fall in the company’s gross margin primarily affected Middleby’s financial performance in the fourth quarter of 2017 and the first quarter of 2018. It is worth mentioning here that the company’s costs of sales jumped 9.8% year over year in fourth-quarter 2017 while the same in the first quarter of 2018 increased 16.3%. In the last five years (2013-2017), the company’s cost of sales has increased 10.1% (CAGR).
In addition, Middleby’s highly leveraged balance sheet raises its financial obligations and weighs on profitability. In the last five years (2013-2017), the company’s long-term debts expanded 12.4% (CAGR), while sequential growth of 2% has been registered in the first quarter of 2018. Its debt/total equity has increased from 68.2% in 2013 to 75.6% in 2017 and was 72.8% at the end of the first quarter of 2018.
Earnings per share, considered to be one of the deciding factors for investment, have seen downward revisions in the last 60 days. The company’s Zacks Consensus Estimate for 2018 has been lowered 7.6% from the 60-day ago tally to $6.00 while the same for 2019 has fallen 7.3% to $6.56. Estimates for the second quarter of 2018 have also been revised downward by 5.8% to $1.62.
Apart from the falling estimates, Middleby’s Earnings ESP of -2.97% for 2018, -4.24% for 2019 and -3.09% for the second quarter raise concerns. Per our proven model, combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the possibilities of an earnings beat by a company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Middleby currently carries a Zacks Rank #4 (Sell).
Middleby’s unfavorable VGM Score of C further lowers the stock’s appeal. Companies with favorable VGM Score of A or B when combined with a Zacks Rank #1 or 2 are anticipated to yield solid returns, clearly outperforming the market.
The aspects discussed clearly reflect that Middleby has poor investment appeal.
3 Investment-Worthy Industrial Stocks
Industrial Products sector comprises 26 sub-industries, all of which are in the top half of the total 265 Zacks industries. Industries in the top half are believed to have higher chances of beating the bottom half. (To learn more visit: About Zacks Industry Rank)
Notably, companies dealing with general industrial machineries are currently in the top 20% of the 265 industries. Using Zacks Stock Screener, we have selected three suitable investment options from companies dealing in general industrial machineries.
Roper Technologies, Inc. (ROP - Free Report) : This $29.2 billion company primarily engages in manufacturing and distribution of medical and scientific imaging products and software, radio frequency products and others. The stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the company’s earnings estimates for 2018 have increased 1.6% to $11.25 while that for 2019 have jumped 1.2% to $12.16. The bottom-line estimates reflect year-over-year growth of 19.4% for 2018 and 8% for 2019. Also, the company’s Earnings ESP of +0.36% for 2018, +0.80% for 2019 and +0.32% for the second quarter of 2018 gives it an edge over other stocks. Its revenues are projected to grow 8.9% in 2018 and 5.4% in 2019.
In the past year, Roper’s shares have rallied 22%, way above the industry’s growth.
IDEX Corporation (IEX - Free Report) : This is an applied solutions company, specializing in fluid and metering technologies, health and science technologies, and fire, safety and other products built to customer specifications. Its market capitalization is $11 billion and currently carries a Zacks Rank #2.
The company’s earnings estimates have been positively revised in the past 60 days. Earnings estimates are pegged at $5.18 for 2018 and $5.63 for 2019, reflecting growth of 1.6% and 1.1% from their respective tallies 60 days ago. Also, the bottom-line estimates represent year-over-year growth of 20.2% for 2018 and 8.6% for 2019. In addition, the company’s Earnings ESP of +0.57% for the second quarter of 2018 and +0.41% for 2018 adds to the stock’s investment appeal. Regarding the top line, we expect 7.9% and 5.3% year-over-year growth for 2018 and 2019, respectively.
In the past year, IDEX’s shares have rallied 26.9%, surpassing the industry’s growth by a wide margin.
Kaman Corporation (KAMN - Free Report) : This $2 billion company primarily acts as a distributor in the industrial and aerospace markets. The stock currently carries a Zacks Rank #2. Its investment appeal is further accentuated by a favorable VGM Score of A.
In the past 60 days, the company’s earnings estimates for 2018 have increased 1% to $3.13 while that for 2019 jumped 0.9% to $3.51. The bottom-line estimates reflect year-over-year growth of 40.4% for 2018 and 12% for 2019. Also, the company’s revenues are projected to grow 5.9% in 2018 and 6.5% in 2019.
In the past year, Kaman’s shares have rallied 42.2%, way above the industry’s rise.
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Forget Middleby, Buy These 3 Industrial Stocks Instead
Industrial Products currently occupies the top position among the 16 broad Zacks sectors. Month-to-date, it has recorded 2.7% gain. Though there are many investment-friendly options in the sector, it also has stocks that currently have poor investment appeal and preferably should be avoided by investors seeking exposure in the space.
Once such stock is The Middleby Corporation (MIDD - Free Report) . The Elgin, IL-based industrial machinery company primarily engages in the production and distribution of foodservice equipments for the commercial, industrial processing and residential markets.
In the past year, Middleby’s share price has declined roughly 19.1% against 4.9% growth of the Industrial Products sector and 6.5% increase of the industry (comprising companies dealing in general industrial machineries) it belongs to.
Notably, the stock has lost 21.3% since the beginning of 2018. Year to date, the company has announced two earnings results, including in-line numbers for the fourth quarter of 2017 and weaker-the-expected results for the first quarter of 2018.
Decline in organic revenues, in each of its three segments, as well as fall in the company’s gross margin primarily affected Middleby’s financial performance in the fourth quarter of 2017 and the first quarter of 2018. It is worth mentioning here that the company’s costs of sales jumped 9.8% year over year in fourth-quarter 2017 while the same in the first quarter of 2018 increased 16.3%. In the last five years (2013-2017), the company’s cost of sales has increased 10.1% (CAGR).
In addition, Middleby’s highly leveraged balance sheet raises its financial obligations and weighs on profitability. In the last five years (2013-2017), the company’s long-term debts expanded 12.4% (CAGR), while sequential growth of 2% has been registered in the first quarter of 2018. Its debt/total equity has increased from 68.2% in 2013 to 75.6% in 2017 and was 72.8% at the end of the first quarter of 2018.
Earnings per share, considered to be one of the deciding factors for investment, have seen downward revisions in the last 60 days. The company’s Zacks Consensus Estimate for 2018 has been lowered 7.6% from the 60-day ago tally to $6.00 while the same for 2019 has fallen 7.3% to $6.56. Estimates for the second quarter of 2018 have also been revised downward by 5.8% to $1.62.
Apart from the falling estimates, Middleby’s Earnings ESP of -2.97% for 2018, -4.24% for 2019 and -3.09% for the second quarter raise concerns. Per our proven model, combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the possibilities of an earnings beat by a company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Middleby currently carries a Zacks Rank #4 (Sell).
Middleby’s unfavorable VGM Score of C further lowers the stock’s appeal. Companies with favorable VGM Score of A or B when combined with a Zacks Rank #1 or 2 are anticipated to yield solid returns, clearly outperforming the market.
The aspects discussed clearly reflect that Middleby has poor investment appeal.
3 Investment-Worthy Industrial Stocks
Industrial Products sector comprises 26 sub-industries, all of which are in the top half of the total 265 Zacks industries. Industries in the top half are believed to have higher chances of beating the bottom half. (To learn more visit: About Zacks Industry Rank)
Notably, companies dealing with general industrial machineries are currently in the top 20% of the 265 industries. Using Zacks Stock Screener, we have selected three suitable investment options from companies dealing in general industrial machineries.
Roper Technologies, Inc. (ROP - Free Report) : This $29.2 billion company primarily engages in manufacturing and distribution of medical and scientific imaging products and software, radio frequency products and others. The stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the company’s earnings estimates for 2018 have increased 1.6% to $11.25 while that for 2019 have jumped 1.2% to $12.16. The bottom-line estimates reflect year-over-year growth of 19.4% for 2018 and 8% for 2019. Also, the company’s Earnings ESP of +0.36% for 2018, +0.80% for 2019 and +0.32% for the second quarter of 2018 gives it an edge over other stocks. Its revenues are projected to grow 8.9% in 2018 and 5.4% in 2019.
In the past year, Roper’s shares have rallied 22%, way above the industry’s growth.
IDEX Corporation (IEX - Free Report) : This is an applied solutions company, specializing in fluid and metering technologies, health and science technologies, and fire, safety and other products built to customer specifications. Its market capitalization is $11 billion and currently carries a Zacks Rank #2.
The company’s earnings estimates have been positively revised in the past 60 days. Earnings estimates are pegged at $5.18 for 2018 and $5.63 for 2019, reflecting growth of 1.6% and 1.1% from their respective tallies 60 days ago. Also, the bottom-line estimates represent year-over-year growth of 20.2% for 2018 and 8.6% for 2019. In addition, the company’s Earnings ESP of +0.57% for the second quarter of 2018 and +0.41% for 2018 adds to the stock’s investment appeal. Regarding the top line, we expect 7.9% and 5.3% year-over-year growth for 2018 and 2019, respectively.
In the past year, IDEX’s shares have rallied 26.9%, surpassing the industry’s growth by a wide margin.
Kaman Corporation (KAMN - Free Report) : This $2 billion company primarily acts as a distributor in the industrial and aerospace markets. The stock currently carries a Zacks Rank #2. Its investment appeal is further accentuated by a favorable VGM Score of A.
In the past 60 days, the company’s earnings estimates for 2018 have increased 1% to $3.13 while that for 2019 jumped 0.9% to $3.51. The bottom-line estimates reflect year-over-year growth of 40.4% for 2018 and 12% for 2019. Also, the company’s revenues are projected to grow 5.9% in 2018 and 6.5% in 2019.
In the past year, Kaman’s shares have rallied 42.2%, way above the industry’s rise.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>