On Nov 29, we reiterated our Outperform recommendation on The Middleby Corporation (MIDD), based on the company’s track record of successful acquisitions, which is expected to boost revenues in the long term.
Why the Reiteration?
Middleby has been experiencing a rise in revenues on the back of successful acquisitions. The company has acquired industry-leading brands and technologies to position itself as a top player in the foodservice equipment and food processing equipment industries. Middleby generated roughly $71.8 million in acquisition revenues that accounted for 27.9% of the total revenue growth in the third quarter of 2013. The company aims for further inorganic growth in the coming quarters.
Additionally, Middleby is gaining market share via its organic growth. As restaurant chains upgrade their equipment, revenues for the Commercial Foodservice Equipment Group are expected to rise. Moreover, the company expects the Food Processing Equipment Group to generate higher revenues in subsequent quarters due to ongoing production operations update by customers as well as new international operation launches.
Furthermore, with the advent of latest technologies, the company expects market share gain in the near future. Middleby is well positioned to leverage its goodwill in the market. The company offers a wide range of products to its target markets and is constantly innovating.
In the last 30 days, the Zacks Consensus Estimate for Middleby has risen 1.9% to $8.02 for 2013 and climbed 3.8% to $9.60 for 2014.
Other Stocks to Consider
Middleby currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the machinery sector include Xylem Inc. (XYL), DXP Enterprises, Inc. (DXPE) and Graham Corp. (GHM). While Xylem carries a Zacks Rank #1 (Strong Buy), DXP Enterprises and Graham Corp. hold a Zacks Rank #2.
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