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Here's Why it is Worth Investing in Middleby (MIDD) Stock Now

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Investors seeking exposure in the industrial machinery space can choose from stocks that sport a Zacks Rank #1 (Strong Buy) or #2 (Buy). Of the many investment options, we believe that The Middleby Corporation (MIDD - Free Report) will be a smart choice. This Elgin, IL-based company’s stock currently carries a Zacks Rank #2 and a VGM Score of B.

The industry, to which Middleby belongs, is currently positioned in the top 42% of more than 250 Zacks industries. Per our research, the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. We believe that the industry gains from infrastructural development, the strengthening housing market, lower taxes (due to the implementation of the U.S. Tax Cuts and Jobs Act), solid manufacturing activities and other tailwinds.

Below, we discussed why investing in Middleby will be a smart choice for investors.

Share Price Performance, Impressive Earnings Outlook: Market sentiments seem to be working in favor of Middleby over time. In the past six months, the company’s share price has increased by 0.9% against the industry’s decline of 9.3% and the Zacks Industrial Products sector’s decrease of 12.3%.




For 2019, the company’s earnings estimates were revised upward by two brokerage firms, indicating brighter prospects ahead. Currently, the Zacks Consensus Estimate for earnings is pegged at $6.93 for 2019, reflecting growth of 0.6% from the 60-day-ago tally. Further, estimates reflect year-over-year growth of 15.8%.

The Middleby Corporation Price and Consensus

 

The Middleby Corporation Price and Consensus | The Middleby Corporation Quote

Middleby believes that healthy top-line growth and lower tax rates will aid in boosting its bottom-line performances in the quarters ahead.

Revenue Growth: In the third quarter of 2018, Middleby’s revenues grew 20.3% year over year, primarily on the back of healthy segmental sales. Revenues for the Commercial Foodservice Equipment Group increased 32.9% year over year while that for the Food Processing Equipment Group and Residential Kitchen Equipment Group grew by 1.6% and 1.4%, respectively.

In the quarters ahead, increased popularity of advanced kitchen equipment, high demand from the domestic restaurant chain customers and sales representative consolidation moves will boost sales for the Commercial Foodservice Equipment segment. In addition, the Residential Kitchen Equipment segment will gain from the strengthening Viking business and solid demand for major branded products like Lynx, U-Line and Marvel.

The Zacks Consensus Estimate for revenues is currently pegged at $2.7 billion for 2018 and $2.95 billion for 2019. Estimates for 2019 reflect year-over-year growth of 9.3%.

Acquisitions: Over time, Middleby fortified its product portfolio and leveraged business opportunities through the addition of assets. In the third quarter of 2018, acquisitions added 19.9% to sales growth.

In December 2018, Middleby acquired EVO America — manufacturer of equipment used in ventless cooking. This buyout will strengthen the operations of Commercial Foodservice Equipment Group. Before this, the company acquired Crown Food Service Equipment in the same month. Crown Food Service Equipment engages in manufacturing steam cooking equipment for use in the commercial foodservice industry. In June 2018, the company completed the $1-billion buyout of Taylor Company.

Other Stocks to Consider

Some other top-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , Barnes Group, Inc. (B - Free Report) and Colfax Corporation (CFX - Free Report) . While DXP Enterprises currently sports a Zacks Rank #1 (Strong Buy), both Barnes and Colfax carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2019, earnings estimates for the three companies have improved over the past 60 days. Further, positive earnings surprise for the last four quarters was 112.62% for DXP Enterprises, 7.04% for Barnes and 8.88% for Colfax.

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