We issued an updated research report on the premium diversified machinery company Middleby Corp.MIDD on Nov 13, 2015. The company provides cooking, warming, food preparation and packaging equipment for commercial, industrial processing and residential markets. Since 1983, the company has significantly improved the scale of its operations with strategic moves. However, it currently faces certain risks stemming from external headwinds.
Middleby continues to ride the growth trajectory on the back of increasing demand from chain-restaurant customers and acquisition benefits. The company is also launching products to reinforce its Commercial Foodservice Equipment Group and Residential Kitchen Equipment Group's business in the future. Moreover, the company ensures greater sustainability through reduction in food wastage as well as initiatives to save energy and power. These measures are expected to help the organization improve its margins and earnings in the upcoming quarters. Also, with the help of cost-saving programs, Middleby attempts to generate greater liquidity from its operating activities.
Few Hints of Trouble
Being multinational in nature, Middleby's commercial affairs are exposed to threats of external headwinds. For instance, sudden recession or scarcity of credit facility in some of its major business hubs such as Latin America might dampen the company's revenues and margins in the near future. At the same time, to sustain the stiff competition in the industry, the company is compelled to invest considerably toward innovations that ultimately weigh on its margins. Also, we believe that appreciation of the U.S. dollar is weighing on the company's revenues in recent times.
Stocks to Consider
Middleby presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Advanced Emissions Solutions, Inc. ADES , Alarm.Com Holdings, Inc. ALRM and Belden Inc. BDC . All three stocks hold a Zacks Rank #2 (Buy).
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