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Middleby (MIDD) Gains From Solid Orders, Provides Guidance

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The Middleby Corporation MIDD yesterday provided projections for the second quarter and 2021. It noted that healthy performances so far in 2021 as well as solid growth prospects led to the provided guidance.

In addition, the company mentioned that its offering to acquire New Port Richey, FL-based Welbilt, Inc. WBT will prove to be of high value to the latter’s shareholders.

Notably, shares of Middleby gained 0.10% yesterday, ending the trading session at $173.95.

Inside the Headlines

As noted, the company anticipates revenue of $808 million in the second quarter of 2021, while the same is projected to be $3,244 million for 2021. The Zacks Consensus Estimate for second-quarter revenues is pegged at $787.4 million and that for 2021 is pinned at $3.12 billion.

Also, the company predicts adjusted earnings before interest, tax, depreciation and amortization of $186 million for the second quarter of 2021 and $730 million for 2021.

On a segmental basis, the company estimates organic orders for the Commercial Foodservice segment to increase 30% from that reported in second-quarter 2019 (pre-COVID level). Likewise, organic orders for both Residential Kitchen and Food Processing segments are predicted to grow 50%. Middleby’s total organic orders are anticipated to grow 37% from the second-quarter 2019 reported level.

Backlogs, at the end of second-quarter 2021, are expected to be $1 billion, up from $705 million at first-quarter 2021 end. Also, backlog compared favorably with $287 million recorded at the end of second-quarter 2019.

The company mentioned that it now has more clarity regarding its backlog, orders and other important parameters. The industry’s recovery from the adverse impacts of the pandemic, gains from sales and distribution measures, the strengthening Residential Kitchen segment, and synergistic benefits from acquired assets are adding to the company’s growth prospects.

In relation to the Welbilt deal, Middleby mentioned that if successful, synergies of $120 million expected from the transaction will represent >$3.00 of incremental value to shareholders of Welbilt. Also, the transaction does not require financing arrangements and will be tax-free for Welbilt’s shareholders.

In April 2021, Middleby communicated its decision to acquire New Port Richey, FL-based Welbilt, Inc. The all-stock transaction will form a behemoth in the food equipment industry, with expertise in the commercial portfolio.

Zacks Rank, Price Performance and Earnings Trend

With a market capitalization of $9.7 billion, Middleby currently carries a Zacks Rank #2 (Buy). The company is likely to benefit from solid product offerings and demand, focus on innovations, acquisitions and a healthy liquidity position.

In the past three months, the company’s shares have gained 8.6% against the industry’s decline of 0.8%.

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Zacks Investment Research

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Also, the company’s earnings estimates are pegged at $7.80 for 2021 and $8.72 for 2022, reflecting increases of 9.2% and 7% from the respective 60-day-ago figures. Also, the estimate for the second quarter of 2021 has improved from $1.75 to $1.95 per share.

The Middleby Corporation Price and Consensus

The Middleby Corporation Price and Consensus
The Middleby Corporation Price and Consensus

The Middleby Corporation price-consensus-chart | The Middleby Corporation Quote

Other Stocks to Consider

Two other top-ranked stocks in the industry are Helios Technologies, Inc. HLIO and Applied Industrial Technologies, Inc. AIT. While Helios presently sports a Zacks Rank #1 (Strong Buy), Applied Industrial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, the earnings surprise for the last reported quarter was 33.78% for Helios and 35.64% for Applied Industrial.

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