On Jan 2, Zacks Investment Research downgraded
The Middleby Corporation
) to a Zacks Rank #2 (Buy) from a Zacks Rank #1 (Strong Buy),
based on the low-margin acquisitions undertaken by the
Why the Downgrade?
Middleby has been successfully strengthening its market
presence through various acquisitions. In the twelve months
ending Oct 2013, Middleby acquired Celfrost, Spooner Vicars,
Viking and Nieco. These acquisitions contributed roughly $71.8
million in revenues or 27.9% of the revenue growth in the third
quarter of 2013. However, The company's acquisition, including
Viking which deals in low-margin products, has led to an overall
decline in margins. Selling and distribution expenses increased
$15.8 million to $41.8 million in the third quarter of 2013,
where $13.2 million of the increment was due to the recent
To add to the list, Middleby acquired Automatic Bar Controls
in Dec last year. With average annual revenues of roughly $30.0
million, Automatic Bar Controls offers beverage dispensing
systems and food sauce dispensing systems to cater to the
foodservice industry. The products serve refrigerated and
non-refrigerated toppings, pizza sauces, salad dressings,
condiments, oils and heated cheese.
Post the acquisition of Automatic Bar Controls, the Zacks
Consensus Estimate for Middleby has increased 1.04% to $9.70 for
Additionally, 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
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 $4.6
billion. Other stocks worth a watch in the industry include
Barnes Group Inc.
Alamo Group, Inc.
Flow International Corporation
). While Barnes Group and Alamo Group carry a Zacks Rank #1, Flow
International holds a Zacks Rank #2.
ALAMO GROUP INC (ALG): Free Stock Analysis
BARNES GRP (B): Free Stock Analysis Report
FLOW INTL CORP (FLOW): Free Stock Analysis
MIDDLEBY CORP (MIDD): Free Stock Analysis
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