Why Middleby Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, food service equipment specialist Middleby (NASDAQ: MIDD  ) has earned a respected four-star ranking.  

With that in mind, let's take a closer look at Middleby and see what CAPS investors are saying about the stock right now.

Middleby facts

Headquarters (founded)

Elgin, Ill. (1888)

Market Cap

$2.7 billion

Industry

Industrial machinery

Trailing-12-Month Revenue

$1.0 billion

Management

Chairman/CEO Selim Bassoul

CFO Timothy FitzGerald

Return on Equity (average, past 3 years)

20.1%

Cash/Debt

$34.4 million / $262.9 million

Competitors

FMC Technologies

Illinois Tool Works

Manitowoc

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 96% of the 2,529 members who have rated Middleby believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, TMFInnovator, offered a balanced take on the opportunity:

- Middleby benefits from brand recognition and trust of the quality of their products.
-Once they get established with commercial restaurants at the account level, they benefit as the chain continues to expand. For example, Papa John's uses only Middleby's ovens in all of the new locations it opens. This is easy $$for Middleby, as long as they can keep up with demand and keep the customer relationship.
-They are in an industry that doesn't naturally attract disruptors. I'm not aware of any Harvard Business School MBA's that are itching to mix things up in commercial kitchens.

The biggest risks I can identify are:
-Huge amount of goodwill on their balance sheet as a result of their acquisitions. Goodwill was 42% of total assets last year ... before the Viking purchase was even counted.
-They do not have established know-how in consumer sales. Will MIDD be able to successfully sell high-end commercial kitchens to homeowners?

Selim Bassoul is a CEO that's worth betting on. I think Middleby is a long-term outperformer.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Middleby may not be your top choice.

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