Trade-Ideas: Middleby (MIDD) Is Today's "Dead Cat Bounce" Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Middleby as such a stock due to the following factors:
- MIDD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.6 million.
- MIDD has traded 439,353 shares today.
- MIDD is up 3.1% today.
- MIDD was down 5.2% yesterday.
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More details on MIDD:
The Middleby Corporation designs, manufactures, markets, distributes, and services commercial foodservice and food processing, and residential kitchen equipment in the United States, Canada, Asia, Europe, the Middle East, and Latin America. MIDD has a PE ratio of 31.6. Currently there are 3 analysts that rate Middleby a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Middleby has been 262,400 shares per day over the past 30 days. Middleby has a market cap of $6.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.05 and a short float of 1.4% with 1.72 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Middleby as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 15.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MIDDLEBY CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MIDDLEBY CORP increased its bottom line by earning $3.40 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.42 versus $3.40).
- The net income growth from the same quarter one year ago has exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 3.7% when compared to the same quarter one year prior, going from $49.92 million to $51.75 million.
- The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, MIDDLEBY CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full Middleby Ratings Report.
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