MIDD: Baking in Assumptions for a Better 2018
- EPS should rise at least 13% in 2018 (and could be up as much as 28% using our early estimate for a 24% tax rate from 33% currently under new U.S. tax law), due to an expected rebound of orders after a difficult 2017, better growth expected at Viking, and margin improvements from recent acquisitions and restructurings.
- Operating margins are still projected to expand to 20.6% in 2017 from 20.1% in 2016 despite sales off around 3% organically, on excellent operational performance and benefits from acquisitions.
- Middleby is now receiving customer orders to refresh equipment, expected to total approximately $300 million over the next 24 months, as customers look for disruptive solutions to deal with rising costs (e.g. water, energy and food waste) and labor shortages.
Middleby is engaged in the design, manufacture, marketing, distribution, and service of a line of foodservice equipment, food preparation, cooking, baking, chilling and packaging equipment, and kitchen equipment. The company's segments are: the Commercial Foodservice Equipment Group, which provides foodservice equipment to serve cooking, warming, refrigeration, freezing and beverage application within a commercial kitchen or foodservice operation; the Food Processing Equipment Group, which provides processing solutions for customers producing pre-cooked meat products; and the Residential Kitchen Equipment Group, which manufactures, sells and distributes kitchen equipment for the residential market.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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