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Middleby Declares Stock Split

Zacks Equity Research

The Middleby Corporation (MIDD) recently announced that its management has approved a three-for-one split for the company stocks. With a two-for-one stock split executed on Jun 18, 2007, this is the second spilt in the company’s history.

Middleby will distribute two additional shares for each share held by shareholders of record as of Jun 16, 2014. The split, effected by distributing stock dividends, will take place on Jun 26 this year. Post the split, the number of outstanding shares will increase from approximately 19 million to 57 million. 

The strength of Middleby’s business model is reflected in its strong cash generation capabilities and commitment to enhance shareholders value. The share price is expected to become much lower than the current value as a stock split does not alter the value of a company.

The split comes after strong results for the first quarter of 2014 announced on May 7, with earnings of $1.78 per share, up 28% year over year. Further, revenues increased roughly 14% year over year to $372.5 million, primarily due to sound contribution from acquisitions. Continuing the spree, the company has acquired Processing Equipment Solutions post the first-quarter-end.

Middleby is optimistic of recording higher sales on the back of organic as well as inorganic growth. The company is launching over 50 products, to be available by the end of this year. In such an upbeat situation, a stock split is anticipated to boost shareholders confidence on the stock.

With a market capitalization of $4.6 billion, Middleby currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Gorman-Rupp Co. (GRC), Illinois Tool Works Inc. (ITW) and Blount International Inc. (BLT). While Gorman-Rupp sports a Zacks Rank #1 (Strong Buy), both Illinois Tool Works and Blount International hold a Zacks Rank #2 (Buy).

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