A Compelling Value in Food Equipment Attracts Size Call Buys
Middleby (MIDD) now has an $8.5M position in July $130 calls with 2000 bought on 1/13 adding to sporadic buyers in October/November. MIDD shares have been working in the $139/$145 zone since July and not a name that trades a lot of option contracts. MIDD’s 8-week EMA is now sloping up and weekly MACD nearing a bullish cross. MIDD is a former high-quality compounder that sold off in 2022 and has been moving sideways the last few years.
MIDD is a leader in the design, manufacture, marketing, distribution, and service of a broad line of (i) foodservice equipment, integrated IoT solutions and universal controllers used in all types of commercial restaurants and institutional kitchens, (ii) food preparation, cooking, baking, chilling and packaging equipment for food processing operations, and (iii) premium kitchen equipment including ranges, ovens, refrigerators, ventilation, dishwashers and outdoor cooking equipment primarily used in the residential market.
MIDD has a market cap of $7.5B and trades 13.9X Earnings, 2.1X Book, 10.5X EBITDA and 11.5X FCF, an attractive value name seen returning to accelerating growth in FY25 and FY26. MIDD’s valuation ranks in the 10th percentile of its 10-year range. MIDD is coming off another weak quarter but the potential is there for a 2025 recovery. MIDD is well-positioned to benefit from the multi-year recovery with its leading brand portfolio, many new product launches, and wide array of unique offerings and designs. MIDD is also well-positioned to support industry trends with innovations to address the need to drive restaurant efficiencies, save on food costs, reducing labor and enhance speed of service. MIDD has made significant investments through acquisition and new product development, expanding into large underpenetrated categories. One of its newer markets, the multi-billion dollar ice and beverage category, is showing strong momentum. MIDD’s residential segment is prone to weakness from the housing market, so a housing recovery is another potential 2025 story that can benefit MIDD.