Stock Analysis

Why The Middleby Corporation (NASDAQ:MIDD) Could Be Worth Watching

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NasdaqGS:MIDD
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The Middleby Corporation (NASDAQ:MIDD) saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Middleby’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Middleby

What is Middleby worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy Middleby today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $232.59, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Middleby’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Middleby look like?

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NasdaqGS:MIDD Earnings and Revenue Growth January 11th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Middleby's earnings over the next few years are expected to increase by 38%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? MIDD’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on MIDD, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Middleby, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Middleby and we think they deserve your attention.

If you are no longer interested in Middleby, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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