2Q17 Under Our Forecast; Maintaining Rating but Lowering Estimates
- 2Q17 (June) adjusted EPS were $1.39 (vs $1.35), 7 cents below our overly optimistic forecast (but a penny over consensus) as a 3% organic sales decline due to customer order timing was partially offset by restructuring savings (operating profit rose 6% with the operating margin up 120 bps);
- Our 2017 EPS estimate is now $5.63 (from $5.87), up 10% from an exceptionally strong 2016;
- For 2018, our EPS estimate is now $6.34 (from $6.60), up 13% from our 2017 projection, assuming some benefit from $300 million in expected orders in Commercial Foodservice (55% of revenue) and growth in the Residential Kitchen segment (30% of revenue).
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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