On Mar 6, Zacks Investment Research downgraded
The Middleby Corporation
) to a Zacks Rank #2 (Buy) due to the high costs associated with
Why the Downgrade?
Middleby recently reported strong results for the fourth
quarter of 2013, beating the Zacks Consensus Estimate for
earnings as well as revenues. Earnings in the quarter came in at
$2.62 per share, up 29% year over year, whereas, revenues
increased 29% year over year to $377.4 million. The revenue
growth was primarily led by contribution from the company's
Middleby has been growing on acquisitions for quite some time.
In the last reported quarter, the company acquired Automatic Bar
Controls, Wunder-Bar and Celfrost. Subsequent to quarter-end, the
company acquired Market Forge Industries. These acquisitions are
expected to contribute significantly to the company's results in
the upcoming quarters. However, the company has been experiencing
a rise in costs related to the acquisitions. In the fourth
quarter, Middleby recorded a respective increase of $11.0 million
and $7.0 million in selling and distribution and general and
administrative expenses, related to the acquisitions. This
hampered the company's margins.
Additionally, the company's organic growth has been noteworthy
in the past quarter. In the fourth quarter, excluding the
acquisitions, sales increased 8.6% year over year.
Following the results, the Zacks Consensus Estimate for
earnings per share increased 3.5% to $10.17 for 2014 while the
same for 2015 increased 16.1% to $11.95 over the past 30 days,
reflecting year-over-year growth of 23.8% and 17.5%,
With the advent of latest technologies, Middleby predicts a
healthy market share gain in the near future leveraging its
goodwill. The company offers a wide range of products to its
target markets and is constantly innovating to thwart
Based in Elgin, Ill., Middleby provides cooking, warming, food
preparation and packaging equipment to the commercial, industrial
processing and residential markets.
Other Stocks to Consider
Middleby currently has a market capitalization of $5.5
billion. Other stocks worth a watch in the industry include
DXP Enterprises, Inc.
). While DXP Enterprises and Kadant hold a Zacks Rank #1 (Strong
Buy), Graco carries a Zacks Rank #2.
DXP ENTERPRISES (DXPE): Free Stock Analysis
GRACO INC (GGG): Free Stock Analysis Report
KADANT INC (KAI): Free Stock Analysis Report
MIDDLEBY CORP (MIDD): Free Stock Analysis
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