Middleby (MIDD) Marked As A Barbarian At The Gate

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 Middleby ( MIDD) as a "barbarian at the gate" (strong stocks crossing above resistance 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 $93.0 million.
  • MIDD has traded 142,287 shares today.
  • MIDD traded in a range 201.1% of the normal price range with a price range of $3.67.
  • MIDD traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 28.4. Currently there are 3 analysts that rate Middleby a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Middleby has been 523,200 shares per day over the past 30 days. Middleby has a market cap of $4.7 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.06 and a short float of 3.5% with 0.59 days to cover. Shares are up 0.4% year-to-date as of the close of trading on Friday.

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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, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 13.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MIDDLEBY CORP has improved earnings per share by 28.1% in the most recent quarter compared to the same quarter a year ago. 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 $8.19 versus $6.50 in the prior year. This year, the market expects an improvement in earnings ($9.49 versus $8.19).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 29.1% when compared to the same quarter one year prior, rising from $25.90 million to $33.45 million.
  • Powered by its strong earnings growth of 28.05% and other important driving factors, this stock has surged by 44.60% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.

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