Personal Finance

Why Middleby Corp. Stock Closed 14% Higher Today

A modern kitchen full of stainless steel appliances and busy chefs.

What happened

Shares of food service equipment maker Middleby (NASDAQ: MIDD) posted strong gains on Wednesday, rising as much as 24.3% intraday before moderating to close up 13.9%. The company may have missed Wall Street's earnings targets with second-quarter report it delivered early this morning but investors were still impressed by its strong revenues.

So what

In Q2, Middleby's top line rose 15% over the year-ago period to land at $668.1 million. Earnings jumped 12%, stopping at $1.51 per diluted share. Your average analyst had been looking for earnings near $1.57 per share on net sales of roughly $646 million.

A modern kitchen full of stainless steel appliances and busy chefs.

Image source: Getty Images.

Now what

Middleby has largely been growing by acquisition in recent quarters, and this past one was no exception: Revenues from new acquisitions accounted for essentially all of the company's year-over-year sales growth.

That being said, management expects organic growth to start gaining some traction in the second half of 2018. On top of that, cost-saving synergies should start making their way onto the income statement as Middleby consolidates a plethora of strategic plug-in buyouts. Therefore, profit margins should improve from here.

Investors breathed a deep sigh of relief over this report's solid revenue gains, and shrugged off the less-impressive results on the bottom line. The stock is still trading 22% lower year-to-date, leaving plenty of room for further improvements.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Middleby. The Motley Fool has a disclosure policy .

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


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

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