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Q3 Earnings Preview for Middleby (NasdaqGS:MIDD)

in EARNINGS/INVESTING IDEAS by

The Middleby Corporation (NasdaqGS:MIDD) is scheduled to report Q3 earnings results before markets open for trading on November 5, 2020.

The company is expected to report earnings of $1.01/share on revenue of $600.6 million. The consensus earnings per share (EPS) of $1.01/share is based on a poll of 6 analysts and represents a decline in eps of −35.4% over the same quarter last year, when the company reported earnings of $1.57/share.

The revenue forecast of $600.6 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −17.0%. Last year the company reported $724 million in revenue for the quarter.

Expected to report EPS contraction of −35.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $600.58 $724.01 −17.0%
EPS $1.01 $1.57 −35.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from The Middleby Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.42 $0.55 32.0% Beat
Q1, 2020 $1.29 $1.46 13.2% Beat
Q4, 2019 $1.71 $1.86 9.1% Beat
Q3, 2019 $1.63 $1.57 −3.6% Missed
Q2, 2019 $1.76 $1.70 −3.5% Missed
Q1, 2019 $1.34 $1.39 3.9% Beat
Q4, 2018 $1.63 $1.79 9.8% Beat
Q3, 2018 $1.58 $1.56 −1.4% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by increasing 16.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $85.73 $99.83 16.4% Increase
May 7, 2020 $54.82 $64.35 17.4% Increase
February 26, 2020 $106.78 $113.56 6.3% Increase
November 6, 2019 $124.74 $118.62 −4.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.86, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.86 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Middleby Corporation is currently trading at $99.54/share, down −0.9% for the day. The company is trading at approximately 77.5% of its 52-week high of $128.48/share. The company’s stock price is down −0.3% since the last earnings report and down −8.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.66 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:MIDD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 19.36 and a forward P/E multiple of 23.35.

The Middleby Corporation’s current share price also implies a price-to-book (P/B) multiple of 2.85. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $99.54
P/E Ratio 19.4x
P/E Ratio (Fwd) 23.3x
PEG Ratio −1.5
Total Debt / Total Capital 30.8%
Levered Free Cash Flow $392.9 million
EV / EBITDA 13.3x

Finbox

The Middleby Corporation is a mid-cap stock with a market capitalization of $5.536 billion and a total enterprise value of $7.368 billion. The company operates in the Industrials sector and the Machinery industry.

The Middleby Corporation designs, manufactures, markets, distributes, and services a range of foodservice, food processing, and residential kitchen equipment in the United States, Canada, Asia, Europe, the Middle East, and Latin America. Its Commercial Foodservice Equipment Group segment offers conveyor, combi, convection, baking, proofing, deck, speed cooking, and hydrovection ovens; ranges, fryers, rethermalizers; steam cooking, food warming, catering, induction cooking, countertop cooking, and kitchen ventilation equipment; heated cabinets, charbroilers, ventless cooking systems, toasters, griddles, charcoal grills, professional mixers, stainless steel fabrication, custom millwork, professional refrigerators, blast chillers, cold rooms, ice machines, freezers; and soft serve ice cream, coffee and beverage dispensing, and home and professional craft brewing equipment for quick and full-service restaurants, convenience stores, retail outlets, hotels, and other institutions. The company’s Food Processing Equipment Group segment provides batch, baking, proofing, conveyor belt, and continuous processing ovens; frying and automated thermal processing systems; grinders, slicers, reduction and emulsion systems, mixers, blenders; battering, breading, and seeding equipment; water cutting systems, food presses, food suspension equipment, filling and depositing solutions, and forming equipment; and food safety, food handling, freezing, and defrosting and packaging equipment for customers producing hot dog, dinner sausage, poultry, and lunchmeat, as well as muffin, cookie, and bread products. Its Residential Kitchen Equipment Group segment offers kitchen equipment comprising cookers, stoves, dishwashers, microwaves, cooktops, wine coolers, ice machines, and ventilation and outdoor equipment. The company was formerly known as Middleby Marshall Oven Company and changed its name to The Middleby Corporation in 1985. The company was founded in 1888 and is based in Elgin, Illinois.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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