Middleby Singed By Margin Weakness

Commercial kitchens and food processors are eager to increase capacity and contain (if not reduce) costs, and automation is a key part of that process. That’s very good news for Middleby (NASDAQ:MIDD), but strong demand from restaurants and foodservice customers is being offset by intense cost pressure, as well as emerging weakness in the residential business.

The valuation wasn’t great, but I thought Middleby was setting up as a “buy the dip” opportunity back in early March. That was absolutely the wrong call, as the shares have remained weak ever since, dropping around 17% and underperforming the market. There aren’t many good comps anymore, as most of Middleby’s competitors are part of larger conglomerates, but neither Marel (OTCPK:MRRLF) or Rational (OTCPK:RATIY) have been all that strong of late either.

 

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Middleby Singed By Margin Weakness