Middleby (NASDAQ:MIDD) Exceeds Q4 Expectations

February 25, 2025 at 07:21 AM EST

MIDD Cover Image

Kitchen product manufacturer Middleby (NYSE: MIDD) announced better-than-expected revenue in Q4 CY2024, but sales were flat year on year at $1.01 billion. Its non-GAAP profit of $2.88 per share was 14.2% above analysts’ consensus estimates.

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Middleby (MIDD) Q4 CY2024 Highlights:

Revenue: $1.01 billion vs analyst estimates of $998 million (flat year on year, 1.6% beat)
Adjusted EPS: $2.88 vs analyst estimates of $2.52 (14.2% beat)
Adjusted EBITDA: $251.2 million vs analyst estimates of $227.4 million (24.8% margin, 10.5% beat)
Operating Margin: 16.8%, up from 11.4% in the same quarter last year
Free Cash Flow Margin: 22.6%, down from 23.8% in the same quarter last year
Organic Revenue fell 1.3% year on year (-4.7% in the same quarter last year)
Market Capitalization: $9.05 billion

“We have continued to execute on our strategic initiatives focused on driving sustainable long-term organic growth, with recent launches of transformative product innovations and investments in differentiated go-to market capabilities. While we are currently facing challenging industry macro-conditions, we expect to see growth across all three of our foodservice segments as we progress through 2025. Our investments will continue to strengthen our leadership position across our businesses, positioning us very favorably as we anticipate moving into a multi-year recovery,” said Tim FitzGerald, CEO of the Middleby Corporation.

Company Overview

Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE: MIDD) is a food service and equipment manufacturer.

Professional Tools and Equipment

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Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Middleby’s sales grew at a tepid 5.5% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Middleby’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2% annually. Middleby Year-On-Year Revenue Growth

Middleby also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Middleby’s organic revenue averaged 4% year-on-year declines. Because this number is lower than its normal revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results. Middleby Organic Revenue Growth

This quarter, Middleby’s $1.01 billion of revenue was flat year on year but beat Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.

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Operating Margin

Middleby has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Middleby’s operating margin rose by 4 percentage points over the last five years, as its sales growth gave it operating leverage.

Middleby Trailing 12-Month Operating Margin (GAAP)

This quarter, Middleby generated an operating profit margin of 16.8%, up 5.4 percentage points year on year. The increase was solid, and since its operating margin rose more than its gross margin, we can infer it was recently more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Middleby’s unimpressive 6.1% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Middleby Trailing 12-Month EPS (Non-GAAP)

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Middleby, its two-year annual EPS growth of 2.5% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Middleby reported EPS at $2.88, up from $2.66 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Middleby’s full-year EPS of $9.43 to grow 7.5%.

Key Takeaways from Middleby’s Q4 Results

We were impressed by how significantly Middleby blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $168 immediately following the results.

Is Middleby an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

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