Middleby Down to Buy - Analyst Blog


On Jan 2, Zacks Investment Research downgraded The Middleby Corporation ( MIDD ) to a Zacks Rank #2 (Buy) from a Zacks Rank #1 (Strong Buy), based on the low-margin acquisitions undertaken by the company.

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 acquisitions.

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 2014.

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 thwart competition.

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. ( B ), Alamo Group, Inc. ( ALG ) and Flow International Corporation ( FLOW ). 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 Report

BARNES GRP (B): Free Stock Analysis Report

FLOW INTL CORP (FLOW): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ALG , B , FLOW , MIDD



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