Trade-Ideas LLC identified

Middleby

(

MIDD

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $32.2 million.
  • MIDD has traded 432,478 shares today.
  • MIDD traded in a range 253.5% of the normal price range with a price range of $6.21.
  • MIDD traded below its daily resistance level (quality: 134 days, meaning that the stock is crossing a resistance level set by the last 134 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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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. Currently there are 4 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 429,200 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 1.57 and a short float of 6.5% with 11.48 days to cover. Shares are up 0.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Middleby as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel its 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 greatly exceeded the industry average of 21.8%. Since the same quarter one year prior, revenues rose by 11.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that MIDD's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • MIDDLEBY CORP's earnings per share declined by 18.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($3.95 versus $3.40).
  • 42.09% is the gross profit margin for MIDDLEBY CORP which we consider to be strong. Regardless of MIDD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MIDD's net profit margin of 10.87% compares favorably to the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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