Company Overview - Middleby Corporation (NASDAQ:MIDD) is a leading player in the foodservice equipment industry, designing, manufacturing, and selling commercial foodservice and food processing equipment. The company serves a diverse customer base, including restaurants, hotels, and food processing companies, and competes with major players like Illinois Tool Works and Welbilt [1]. Stock Performance - Over the past 30 days, Middleby has experienced a slight decline of approximately 1.79%, with a more pronounced drop of about 4.92% in the last 10 days. Despite this downturn, the stock has a notable growth potential of 24.83%, indicating significant upside perceived by the market [2]. Financial Health - Middleby has a strong Piotroski Score of 8, reflecting solid financial strength and stability. This high score suggests effective financial management, which is a positive indicator for potential investors [3]. Investment Potential - The target price for Middleby is set at $168.33, indicating substantial upside potential. This target, combined with the high Piotroski Score, supports the case for Middleby as an attractive investment opportunity for those looking to capitalize on its potential rebound [4][5].

Company Overview - Middleby Corporation (NASDAQ:MIDD) is a leading manufacturer of commercial kitchen equipment, residential appliances, and food processing systems, operating globally and serving diverse customers in the foodservice, food processing, and residential kitchen markets [1] Stock Performance - Over the past 30 days, Middleby has seen a modest gain of 1.49%, indicating positive momentum, but experienced a slight decline of 1.65% in the last 10 days, which may present a buying opportunity for investors [2] Growth Potential - Middleby shows a promising growth potential of 25.07%, suggesting significant room for stock price appreciation, making it attractive for growth-focused investors [3][5] - The company boasts a Piotroski Score of 8, reflecting solid financial health and efficient operations [3][5] Target Price - The target price for Middleby is set at $168.33, indicating potential upside from the current price and aligning with the stock's growth potential, thus presenting a favorable risk-reward profile for investors [4][5] - The stock has recently touched a local minimum, suggesting a possible reversal and upward movement [4]

Core Insights - The article reflects on the performance of five stocks selected for a sampler ten years ago, analyzing their returns against the S&P 500 and discussing lessons learned from their performance [1][2][3]. Group 1: Activision Blizzard (ATVI) - Activision Blizzard was selected for its strong gaming franchises, including Call of Duty and Candy Crush, and was acquired by Microsoft for $95 per share, resulting in a total return of 234.9% over ten years [9][11][12]. - The company successfully diversified its portfolio through acquisitions, maintaining a strong presence in the gaming industry [10][14]. - The stock significantly outperformed the S&P 500, which rose 118.4% during the same period, highlighting the effectiveness of its business strategy [12][14]. Group 2: Casey's General Stores (CASY) - Casey's General Stores has expanded from 1,888 stores to 2,658 over the past decade, focusing on pizza sales and enhancing customer experience [18][20]. - The stock price increased from $104.80 to $495.14, representing a 373% return, significantly outperforming the S&P 500's 223% return [22][23]. - The company shifted its focus from fuel sales to in-store offerings, with gross profit from inside sales nearly doubling that of fuel sales [21][22]. Group 3: FireEye (FEYE) - FireEye, initially a leader in cybersecurity, struggled with execution and ultimately merged with Mandiant, resulting in a 10-year return of only 16% [24][28][30]. - The company failed to adapt its business model effectively, leading to its underperformance compared to the S&P 500 [26][29]. - The acquisition by Alphabet did not yield significant returns for original investors, emphasizing the importance of strong execution in emerging industries [28][30]. Group 4: Mercado Libre (MELI) - Mercado Libre evolved from a marketplace to a comprehensive platform offering payments, logistics, and credit services, with a market cap now at $122 billion [30][31]. - The stock price surged from $109.94 to $2,384, achieving a 2,069% return, far exceeding the S&P 500's performance [33][34]. - The company's revenue and net income have increased dramatically, showcasing its successful expansion and leadership in Latin America [32][34]. Group 5: Middleby (MIDD) - Middleby, a provider of kitchen equipment, saw its stock price rise only 27% over the past decade, underperforming the market [37][38]. - The departure of its long-time CEO and macroeconomic challenges in the restaurant industry contributed to its lackluster performance [39][40]. - Despite ongoing acquisitions and growth, the company faced headwinds from high borrowing costs and reduced consumer spending in the residential market [40].

Group 1 - The article discusses the investment perspective on The Middleby Corporation (NASDAQ: MIDD), emphasizing a hold rating due to a lack of improvements in the CF segment fundamentals [1] - The author advocates for a fundamentals-based approach to value investing, highlighting the importance of long-term durability and robust balance sheets over low multiple stocks [1] - It is noted that while investing in successful companies carries risks, the potential for significant development can make immediate price less critical [1]

Core Insights - The Middleby Corporation (MIDD) reported adjusted earnings of $2.35 per share for Q2 2025, exceeding the Zacks Consensus Estimate of $2.20, although the earnings decreased by 1.7% year over year due to lower sales [1] - Net sales reached $977.9 million, surpassing the consensus estimate of $975 million, but showed a decline of 1.4% year over year, with organic sales down by 5.4% [1][10] - The company is on track to spin off its food processing business into a standalone public company by the first half of 2026, aiming to enhance strategic focus and capital optimization for both entities [11][12] Financial Performance - The Commercial Foodservice Equipment Group segment, accounting for 59.4% of net sales, reported sales of $580.6 million, down 4.8% year over year, with organic sales decreasing by 5.5% [2] - The Residential Kitchen Equipment Group segment, representing 18.5% of total sales, saw a decline to $181.1 million, down 6.1% year over year, with organic sales down by 7.8% [3] - The Food Processing Equipment Group segment, which makes up 22.1% of total sales, experienced a 14.4% increase in sales to $216.2 million, driven by acquisitions, despite a 2.9% decline in organic sales [4] Margin and Cost Analysis - Cost of sales decreased by 0.9% year over year to $606.6 million, while gross profit fell by 2.2% to $371.3 million, resulting in a gross margin of 38%, down 30 basis points from the previous year [5] - Selling, general and administrative expenses rose by 7.5% year over year to $213.6 million, leading to an operating income decrease of 11.6% to $155.4 million and an operating margin decline of 180 basis points to 15.9% [5] Cash Flow and Capital Expenditure - As of the end of Q2 2025, Middleby had cash and cash equivalents of $511.5 million, down from $689.5 million at the end of December 2024, with long-term debt slightly reduced to $2.33 billion [7] - In the first half of 2025, net cash generated from operating activities was $263.1 million, compared to $290.4 million in the same period last year, while capital expenditure increased to $54.7 million from $24.7 million [8] Future Guidance - For Q3 2025, Middleby expects total sales to be between $950 million and $975 million, with segment-specific projections for Commercial Foodservice, Residential Kitchen, and Food Processing [13] - The company anticipates adjusted EBITDA in the range of $185 million to $195 million and adjusted earnings per share between $2.04 and $2.19 [14] - For the full year 2025, total sales are projected to be between $3.81 billion and $3.87 billion, with adjusted EBITDA forecasted at $770 million to $800 million and adjusted earnings per share expected to be between $8.65 and $9.05 [15]

Financial Data and Key Metrics Changes - In Q2, the company reported revenues of over $580 million with a strong EBITDA margin of 27% [12] - Adjusted EBITDA for Q2 was $200 million, and adjusted EPS was $2.35 [14] - Free cash flow for Q2 was $101 million, with a leverage ratio of 2.3 times [17] Business Line Data and Key Metrics Changes - Commercial Foodservice revenues were below prior year levels but showed sequential growth, driven by demand for leading technologies [12] - Residential segment revenues grew sequentially to over $181 million, with an EBITDA margin exceeding 10% [13] - Food Processing revenues exceeded $216 million in Q2, with an EBITDA margin over 21% [13] Market Data and Key Metrics Changes - The company experienced growth in the indoor appliance markets in the US and UK, while facing challenges in the outdoor segment due to tariff pressures [13][9] - The snack category within Food Processing is growing rapidly, indicating a large market opportunity ahead [10] Company Strategy and Development Direction - The company has made strategic investments over the past three years to enhance innovation, go-to-market capabilities, and operational excellence [3] - Focus on expanding into new market adjacencies, particularly in ice and beverage categories, which are seen as transformational growth opportunities [5][6] - The company plans to continue share repurchases while maintaining financial flexibility for strategic growth investments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory despite current economic challenges, emphasizing a strong foundation for long-term growth [3] - The outlook for Q3 anticipates a slight step back in revenues compared to Q2, with expectations for Q4 to be the strongest of the year [20] - Management noted that the commercial foodservice segment is under pressure but remains optimistic about future recovery [92] Other Important Information - The company expects to complete a food processing spinoff in 2026, which is anticipated to operate efficiently and independently [23] - The company has a robust pipeline for M&A activities, particularly in the food processing segment [61] Q&A Session Summary Question: Can you provide more details on the EBITDA guidance by segment? - Management indicated that margins will likely decrease slightly in Q3 due to revenue stepping down, but will improve in Q4 as revenues increase [31] Question: What is the current run rate for grill revenues and how are tariffs impacting this segment? - Grill revenues are in the $100 to $150 million range, but tariffs have caused channel partners to reduce inventory levels significantly [33][36] Question: What is the outlook for large QSR customers in the second half? - Management noted that traffic through QSRs has been down, leading to delays in new store openings and impacting replacement orders [44] Question: How is the tariff impact distributed across segments? - Approximately 60-65% of the tariff impact is felt in the commercial segment, with residential at 20-25% and food processing at 10-15% [55] Question: What are the expectations for sustainable growth in the commercial foodservice segment? - Management believes that the chains will eventually recover, and the company is well-positioned to benefit from this recovery [95] Question: How are new products introduced at NAFEM performing? - New products are gaining traction in the market, with expectations for significant revenue growth in 2026 and beyond [102]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of over $580 million with a strong EBITDA margin of 27% [12] - Total company adjusted EBITDA for Q2 was $200 million, and adjusted EPS was $2.35 [14] - Free cash flow for Q2 was $101 million, with a leverage ratio of 2.3 times [16] Business Line Data and Key Metrics Changes - Commercial Foodservice revenues were below prior year levels but showed sequential growth, driven by demand for leading technologies [12][14] - Residential segment revenues grew sequentially to over $181 million, with an EBITDA margin exceeding 10% [12] - Food Processing revenues exceeded $216 million in Q2, with an EBITDA margin of over 21% [13] Market Data and Key Metrics Changes - The company experienced reduced demand from large chain customers in the Commercial Foodservice segment due to lower traffic and cost pressures [4][12] - The residential outdoor segment faced significant challenges from tariff-related pressures, leading to reduced inventories by channel partners [9] - The food processing segment showed improvement in sales and orders, particularly in the protein and bakery segments [10] Company Strategy and Development Direction - The company is focused on long-term growth through strategic investments in innovation, market capabilities, and operational excellence [3][5] - There is a strong emphasis on expanding into new market adjacencies, particularly in the ice and beverage categories [5][6] - The company plans to continue share repurchases while maintaining financial flexibility for strategic growth investments [18][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory despite current economic challenges, citing a fundamentally stronger business than ever before [3][5] - The outlook for Q3 includes expected total revenue of $950 to $975 million, with a stronger Q4 anticipated [20][22] - Management noted that market conditions for food processing are modestly improving, while residential market conditions are stable [20] Other Important Information - The company plans to complete a food processing spin-off in 2026, with activities on track for a successful transaction [23][24] - The company has repurchased over 2.2 million shares for nearly $323 million in Q2, with continued buybacks in July [17][18] Q&A Session Summary Question: Can you provide more details on the EBITDA guidance by segment? - Management indicated that margins will likely decrease in Q3 due to a slight revenue step down, but expect a recovery in Q4 [32] Question: What is the current run rate for grill revenues and margin performance? - The grill business is operating in the $100 to $150 million range, but tariffs have impacted growth [34] Question: What is the impact of tariffs on different business segments? - Approximately 60-65% of the tariff impact is from the commercial segment, 20-25% from residential, and 10-15% from food processing [57][58] Question: What is the outlook for large QSR customers in the second half? - Management noted that traffic has been down significantly, affecting new store development and replacement orders [46][48] Question: How is the company addressing the tariff impacts? - The company is focusing on supply chain improvements and operational initiatives to mitigate tariff impacts [49][50] Question: What is the capital allocation strategy moving forward? - The company will continue with share buybacks while evaluating M&A opportunities, particularly in food processing [111][115]

Financial Performance - Q2 2025 - Net sales decreased by 1.4% to $977.9 million compared to $991.6 million in Q2 2024[4] - Gross profit decreased by 2.2% to $371.3 million, with a gross profit margin of 38.0%[4] - Operating income decreased by 11.6% to $155.4 million[4] - Net earnings decreased by 8.1% to $106.0 million[4] - Adjusted EBITDA decreased by 7.5% to $200.2 million, representing 20.5% of net sales[4] - Operating cash flow decreased by 18.4% to $122.0 million[4] Segment Performance - Q2 2025 - Commercial Foodservice net sales decreased by 4.8% to $580.6 million, with organic net sales declining by 5.5%[8] - Residential Kitchen net sales decreased by 6.1% to $181.1 million, with organic net sales declining by 7.8%[10] - Food Processing net sales increased by 14.4% to $216.2 million, but organic net sales decreased by 2.9%[13] Revenue Breakdown - YTD 2025 - Commercial Foodservice accounted for 61% of total revenue, Food Processing 20%, and Residential Kitchen 19%[6] - The United States and Canada accounted for 67% of total revenue, Europe and the Middle East 23%, Asia 6%, and Latin America 4%[7] Financial Outlook - The company projects total revenue of $950-975 million for Q3 2025 and $3.81-3.87 billion for the full year 2025[16] - Adjusted EBITDA is projected to be $185-195 million for Q3 2025 and $770-800 million for the full year 2025[16] Capital Allocation - The company repurchased 3.1 million shares, representing 5.7% of equity, for $449 million YTD 2025[18, 20]

Group 1 - Middleby reported revenue of $977.86 million for the quarter ended June 2025, a year-over-year decline of 1.4%, with EPS of $2.35 compared to $2.39 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $974.87 million by +0.31%, while the EPS surprise was +6.82% against a consensus estimate of $2.20 [1] - Over the past month, Middleby shares returned -2.3%, contrasting with the Zacks S&P 500 composite's +0.5% change, and the stock holds a Zacks Rank 3 (Hold) [3] Group 2 - Revenue from the Commercial Foodservice segment was $580.61 million, below the average estimate of $592.51 million, representing a year-over-year decline of -6.3% [4] - Revenue from the Residential Kitchen segment was $181.06 million, also below the average estimate of $185.38 million, reflecting a -6.1% year-over-year change [4] - Revenue from the Food Processing segment was $216.2 million, surpassing the average estimate of $197.92 million, with a year-over-year increase of +20.5% [4] - Segment Operating Income for Commercial Foodservice was $137.9 million, exceeding the average estimate of $136.13 million [4] - Segment Operating Income for Residential Kitchen was $9.33 million, below the average estimate of $11.11 million [4] - Segment Operating Income for Food Processing was $42.68 million, above the average estimate of $40.23 million [4]

Company Performance - Middleby (MIDD) reported quarterly earnings of $2.35 per share, exceeding the Zacks Consensus Estimate of $2.20 per share, but down from $2.39 per share a year ago, representing an earnings surprise of +6.82% [1] - The company posted revenues of $977.86 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.31%, but down from $991.55 million year-over-year [2] - Over the last four quarters, Middleby has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Outlook - Middleby shares have increased approximately 6.8% since the beginning of the year, compared to the S&P 500's gain of 7.1% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the coming quarter is $2.24 on revenues of $971.84 million, and for the current fiscal year, it is $9.19 on revenues of $3.89 billion [7] Industry Context - The Manufacturing - General Industrial industry, to which Middleby belongs, is currently ranked in the top 16% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Middleby's stock performance [5]