Here's Why You Should Steer Clear of Middleby (MIDD) Now
The Middleby Corporation MIDD is grappling with persistent supply-chain issues, rising costs and expenses, high debt levels and foreign-currency headwinds.
The current Zacks Rank #4 (Sell) player has a market capitalization of $7 billion.
Let’s discuss the factors that might continue to take a toll on the firm.
Steep Costs and Expenses: Middleby has been witnessing inflationary increases in costs and expenses over time. In the first nine months of 2022, the cost of goods sold increased 2.7% due to supply-chain constraints, high raw material costs and COVID-related issues in China. The ongoing supply-chain restrictions (especially component parts), labor issues and cost inflation are expected to persist in the quarters ahead, affecting MIDD’s margins and profitability.
High Debt Level: In the last five years (2017-2021), the company’s long-term debt witnessed an 18.5% CAGR. MIDD’s long-term debt remained high at $2,693.3 million at the end of third-quarter 2022, despite effort to lower debts. Also, Middleby’s long-term debt/capital ratio is currently 0.52, higher than 0.38 of the industry. Such high debt levels raise concerns for the company.
Forex Woes: Given its widespread presence in the international markets, Middleby is exposed to unfavorable foreign currency movement. For instance, in second-quarter and in third-quarter 2022, foreign exchange headwinds had an adverse impact of 2.5% and 3.6%, respectively, on its revenues, year over year. A stronger U.S. dollar might depress MIDD's overseas business results in the quarters ahead.
The Middleby Corporation Price and Consensus
The Middleby Corporation price-consensus-chart | The Middleby Corporation Quote
Southbound Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for 2022 earnings has been revised 5.1% downward.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 4.6% for fiscal 2023 in the past 60 days. Shares of Applied Industrial have risen 34.8% in the past six months.
IDEX Corporation IEX presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.8% for 2022. The stock has rallied 28.4% in the past six months.
EnerSys ENS delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank #2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 22.1% in the past six months.
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Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
The Middleby Corporation (MIDD) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
