MIDD - Embedded Expectations Analysis - 2020 04 06
The Middleby Corporation (MIDD:USA) currently trades well below recent averages relative to UAFRS-based (Uniform) earnings, with a 12.6x Uniform P/E. At these levels, markets have bearish expectations for the firm, but management is confident about margins, sales growth, and R&D investmentsSpecifically, management generated an excitement marker when saying that they might get to 3%-5% sales growth from more business coming through. In addition, management is confident that margins of pre-2017 businesses stand at 29% in 2019, that margins have improved on their new beverage business acquisitions, and that U.S. growth was supported by strength in Viking. They are also confident that R&D investments will generate increasing revenue in 2020 and that they continue to be focused on moving the business forward from a profit standpoint. Moreover, they are confident about integrating their industrial food processing group's automation with their commercial equipment portfolio and about investing $12mn annually for customer-facing technology
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.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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