The Middleby Corporation MIDD is benefiting from a robust backlog level and strong incoming order growth across segments despite rising costs and expenses. The company’s organic sales are driven by improvements in end-market conditions and solid consumer demand in the Commercial Foodservice and Food Processing segments.
Accretive pricing, shifting mix toward higher technology solutions and disciplined cost control policies are supporting the Commercial Foodservice Equipment Group’s revenues. The Food Processing Equipment Group is being driven by strong international growth in all end markets and revenue growth across bakery and protein products.
Middleby has been strengthening and expanding its businesses through asset additions for a while. Its Flavor Burst acquisition in January 2023 complements the company’s existing product offerings in the beverage group. The acquisition of Marco Beverage Systems in December 2022 complements the company's existing beverage portfolio, expanding its cold brew dispense, coffee brewers and a variety of hot, cold and sparkling water dispenser offerings.
The November 2022 acquisition of Escher Mixers helped the company reduce product production costs and eliminate the usage of dough additives to produce premium quality bakery items with a longer shelf life by leveraging Escher’s automated dough mixing solutions and line capacity utilization. Middleby acquired Colussi Ermes in July 2022, which builds on the company’s food processing solutions. The buyout of CP Packaging in the same month expanded its manufacturing operations in the Food Processing Equipment Group by boosting packaging equipment offerings. Acquired assets boosted its sales by 4% in first-quarter 2022.
MIDD is committed to rewarding its shareholders handsomely with share buybacks. In 2022 and in the first three months of 2023, it repurchased common shares worth $264.8 million and $48 million, respectively.
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In light of the above-mentioned positives, we believe, investors should hold on to Middleby stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past six months, the stock has risen 0.7%.
Stocks to Consider
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Parker-Hannifin Corporation PH presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 12.4%, on average.
In the past 60 days, estimates for Parker-Hannifin’s fiscal 2023 (ending June 2023) earnings have increased 5.3%. The stock has gained 5.9% in the past six months.
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