The U.S. industrial production shot up for the third straight month in August and is on track to tap the highest yearly growth since 2010. The uptick primarily stemmed from higher manufacturing, mining and utilities output. Notably, we notice that the Institute for Supply Management manufacturing index for the last month increased for the 113th month on the trot.
Against this opportune backdrop, picking up stocks from the manufacturing industries would be a prudent investment choice. In sync with this, The Middleby Corporation (MIDD – Free Report) will likely add sparkle to your portfolio. The company currently carries a favorable Zacks Rank #2 (Buy).
Why to Grab the Stock?
Strong Top-Line Prospects: Middleby’s revenues improved 6.1% in the first six months of 2018. Going forward, the company believes stronger demand from chain-restaurant customers, strength in the Viking business, ongoing distribution & sales consolidation moves, as well as product launches will drive its top-line performances in the quarters ahead. Per our estimates, Middleby’s year-over-year revenue growth is currently pegged at 17.3% and 9.3% for 2018 and 2019, respectively.
Over the past three months, Middleby’s shares have rallied 19.3%, outperforming 6.1% growth recorded by the industry it belongs to.
Profitability: Middleby pulled off a positive earnings surprise of 1.87% in the second quarter. The company expects that stellar revenues, diligent cost-saving moves and lower corporate tax rates will drive its bottom-line growth in the quarters ahead. Over the past sixty days, the Zacks Consensus Estimate for the company’s earnings in 2018 moved up 1.7% to $6.13 per for 2018 and 2.7% to $6.90 for 2019.
Acquisition Story: Acquisition-related benefits boosted Middleby’s sales by $84.1 million in the June-end quarter. The company believes Sveba Dahlen, QualServ, L2F, Globe, Burford, CVP Systems, and Scanico buyouts (all closed in 2017) will likely continue to bolster the company’s revenues in the quarters ahead. Whereas buyouts made this year, like M-TEK, Josper S.A, Firex Srl and Taylor Company, would also support the uptick in the near term.
Liquidity: Middleby has been steadily improving its liquidity. The company’s free cash flow has steadily improved since the beginning of 2015.
Looking ahead, Middleby intends to fund new capital-expenditure programs and provide increased returns to shareholders on the back of higher liquidity.
Other Stocks to Consider
Some other top-ranked stocks in the same space are listed below:
Altra Industrial Motion Corp. (AIMC – Free Report) sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
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