Middleby Boosts Inorganic Growth on Goldstein Eswood Buy - Analyst Blog

Premium diversified machinery manufacturer Middleby Corporation (MIDD) kept its inorganic growth alive by acquiring famous Australian firm Goldstein Eswood for an undisclosed amount. The deal comes in the wake of Middleby’s global growth strategy. By including leading brands such as Eswood and Goldstein, the company expects to expand its operations in the advanced industrial markets of New Zealand and Australia.

Acquisition Benefits  

The acquisition of Goldstein Eswood would enhance the revenues and margins of Middleby’s Commercial Foodservice Equipment segment in the upcoming quarters. This is due to the fact that the deal will soon enable Middleby to independently sell the rare commercial equipment products of Goldstein, such as ranges, griddles, fryers and ovens. Also, the company would become the proud seller of Eswood’s non-imitable dishwashing equipments. Moreover, inclusion of such reputed brands in its portfolio is expected to remarkably augment the company’s market goodwill.

Hence, the latest buyout would expand the sales, manufacturing and service providing capabilities of Middleby. The company would not only be able to serve its customers in a more proficient manner but also expand its ownership in the global restaurant chains.

Acquirer

Middleby has been conducting business in the cooking equipment industry since 1988. The company designs, produces and markets diversified equipments for food servicing and processing, as well as residential cooking. The company enjoys a high brand value in the market.

Recently, Middleby has acquired Italy-based Desmon Food Service Equipment Company for an undisclosed amount. Prior to that, the company boosted its residential business platform by entering into an agreement with U-Line Corporation for acquiring the latter’s innovative and productive business lines. Further, through acquisition of firms such as Viking Range Corporation, Concordia Coffee Company Inc. and Process Equipment Solutions, Middleby has substantially expanded the scale of its operations over the years.

Acquiree
 
Goldstein Eswood is a famous commercial equipment fabricating company in the contemporary industrial market. With major offices in Australia, Queensland, Tasmania and New Zealand, the organization generates approximate annual revenue of $25 million.

Insights

In the last reported quarter, Middleby’s adjusted earnings surpassed the year-ago tally by 43.8% and the Zacks Consensus Estimate by 22.1%. With 12.3% year-over-year revenue growth, the company has maintained a strong outlook for upcoming earnings. Also, expecting the company’s inorganic growth plans to augment its revenue and margins in near future, investors’ sentiments will likely be optimistic toward the stock.

With a market capitalization of $5.67 billion, Middleby currently sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the industry include Blount International Inc. (BLT), Sun Hydraulics Corp. (SNHY) and The Babcock & Wilcox Company (BWC). While both Blount International and Sun Hydraulics carry a Zacks Rank similar to Middleby, Babcock & Wilcox Company holds a Zacks Rank #2 (Buy).

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