Recent Share Price Decline Creates an Opportunity
- The shares are off 17% from their March 2017 high despite EPS projected up 15% to a record $5.87 in 2017 and at least 12% in 2018 to $6.60.
- Operating margins are projected to expand from 20.1% in 2016 to 21.9% in 2017, and a further 23.2% in 2018, despite concerns over restaurant industry growth, on excellent operational performance and benefits from acquisitions, with outperformance likely to continue (results have significantly exceeded consensus estimates in each of the last six quarters).
- A record number of major restaurant chains, working exclusively with Middleby, are testing the Company’s solutions for time/water/energy/labor savings as well as to introduce new menu items, which should drive organic growth improvement later in 2017.
- New Viking introductions should obsolete legacy products near year-end, improving results in the Residential Kitchen segment.
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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