You never really can tell just what Wall Street will
decide to focus on when it comes to a company undergoing a turbulent
transition period. In the case of Middleby (MIDD)
and its second quarter earnings, it seems as though the Street was
happy to look past weaker-than-expected EBITDA (a 6% miss on
already-lowered expectations) and gross margin and focus on a small
revenue beat and a generally more constructive tone from management.
I had some interest in Middleby earlier this year
as it slid toward $100, and I wouldn’t call today’s valuation
unreasonable, although it is trading for more than I’d care to pay on
both a DCF and EV/EBTIDA basis. If Middleby can maintain, or improve
upon, the best results seen in the Commercial Foodservice and
Residential businesses in years, I expect these shares to trade higher,
but the weaker margins are a concern, and I’m not completely sold that
the organic growth issues are fixed.
Read more here:
Can Middleby Follow Through After Beating Low Expectations?
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