Middleby's Deutsche Beverage Buyout To Aid Beverage Business

The Middleby Corporation (NASDAQ:MIDD) , on Mar 2, announced that it acquired Charlotte, N.C.-based Deutsche Beverage Technology. The financial terms of the transactions have been kept under wraps.

It is worth mentioning here that this is the second acquisition by Middleby so far in 2020. The company’s shares gained 0.2% yesterday, closing the trading session at $111.99.

Inside the Headlines

Deutsche Beverage is engaged in the designing and manufacturing of systems related to beverage brewing and processing. Solutions offered can be used for kombucha, beer, cold brew coffee and other liquid extractions purposes.

Product offerings of Deutsche Beverage include piping, milling systems, custom metal fabrications and boiler for stream systems. The firm generates $40 million in revenues annually.

The Deutsche Beverage buyout is expected to strengthen Middleby’s product offering in the beverage platform. Notably, the company believes that the buyout will complement its June 2019 acquisition of Ss Brewtech — one of the leading beverage equipment makers and the finest player in the craft brewing industry.

Middleby’s Inorganic Initiatives

We believe that the above-mentioned transaction is consistent with the company’s policy of acquiring businesses for attracting customers, and gaining access to various regions and product lines.

In January 2020, it acquired RAM Fry Dispensers. The latter is engaged in the manufacturing of automated frozen fry dispensing equipment. The buyout is expected to strengthen Middleby’s product offering in the restaurant automation platform. In November 2019, Middleby acquired Redwood City, CA-based Brava Home Inc. — a specialist in providing advanced technology for residential cooking.

In July 2019, Middleby acquired Packaging Progressions, Inc. The buyout has been strengthening Middleby’s product offering related to processing technologies, with the addition of two products — ProLeaver and ProStax. Further, it bought Cooking Solutions Group of Standex International Corporation (NYSE:SXI) and Newton, MA-based Powerhouse Dynamics, Inc. in April 2019.

Notably, buyouts drove Middleby’s sales by 5.1% in the fourth quarter of 2019.

Zacks Rank, Earnings Estimates and Price Performance

Middleby, with a market capitalization of $6.3 billion, currently carries a Zacks Rank #3 (Hold).

The company anticipates gaining from product innovation, improving selling techniques, solid customer offerings, focus on growth markets and strengthening Viking business. It also expects to benefit from acquired assets. However, weak spending by restaurant chains and adverse impacts of coronavirus on Commercial Foodservice Equipment Group in the first half of 2020 might play spoilsport.

The Zacks Consensus Estimate for Middleby’s earnings is pegged at $7.30 for 2020 and $7.89 for 2021, reflecting growth of 0.8% and a decline of 1.7% from the respective 30-day-ago figures.

The Middleby Corporation Price and Consensus

The Middleby Corporation Price and Consensus

The Middleby Corporation price-consensus-chart | The Middleby Corporation Quote

Shares of the company have gained 1.1% compared with the industry’s 2.7% decline in the past three months.

Stocks to Consider

Two better-ranked stocks in the same industry are Tennant Company (NYSE:TNC) and Dover Corporation (NYSE:DOV) . While Tennant sports a Zacks Rank #1 (Strong Buy) at present, Dover carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for both companies have improved for the current year. Further, average earnings surprise for the last four quarters was a positive 26.60% for Tennant and 5.36% for Dover.

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