We issued an updated research report on
The Middleby Corporation
) on Jun 6, 2014. Over the past few quarters, the company
experienced strong quarterly results with acquisitions playing a
major tailwind. For instance, acquired assets like Market Forge
Industries, Automatic Bar Controls and Celfrost contributed
significantly to the company's top-line growth in the first quarter
of 2014. Additionally, Middleby took over Processing Equipment
Solutions in April this year. These acquisitions are expected to
further benefit results in the coming quarters.
Middleby also anticipates rise in revenues due to the ongoing
equipment upgrade from various restaurant owners. Further, the
company is launching over 50 products in the second half of 2014,
including ranges, ovens, refrigeration, cooktops and ventilation
products, which will boost the company's market share.
Recently, Middleby announced a three-for-one stock split, which
will be carried out by distributing two additional shares for each
share held by shareholders of record as of Jun 16, 2014. This will
be treated as a stock dividend payment which will increase the
company's shares outstanding from 19 million to roughly 57
However, due to the various acquisitions, the company is
experiencing increased selling and distribution as well as general
and administrative expenses. This is negatively impacting the
margins. Moreover, Middleby is exposed to risks like volatility in
raw materials. The company uses steel as the main raw material,
which accounts for roughly 15-20% of the total cost of sales.
Fluctuating steel prices impacts the company's margins and
With a market capitalization of $4.8 billion, Middleby holds a
Zacks Rank #4 (Sell). Some better-ranked stocks in the industry
Illinois Tool Works Inc.
). While Gorman-Rupp sports a Zacks Rank #1 (Strong Buy), Illinois
Tool Works and Dover Corporation hold a Zacks Rank #2 (Buy).
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