What happened

Restaurant equipment specialist Middleby (NASDAQ:MIDD) lost to the market last month by dropping 15% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline left shareholders in negative territory for the year as the stock lost 24% in 2018 while the broader market fell 6%.

A chef presents meals from the kitchen.

Image source: Getty Images.

So what

Investors aren't completely behind the company's growth strategy, which involves leaning on acquisitions to fuel sales gains. Middleby continued that approach last month, announcing the purchase of Crown Food Service Equipment and EVO America, two companies that together generate about $30 million of annual revenue. They join the dozens of other brands that Middleby maintains today in the commercial foodservice industry. 

The trouble is that sales aren't budging much after you account for all of the acquired franchises. Organic revenue increased by less than 1% in the most recent quarter, in fact.

Now what

CEO Selim Bassoul and his team are predicting that sales will pick up, especially in international markets, over the next few months. The outlook for their food processing segment is more muted, though, and will depend on faster growth in the restaurant industry for order volumes to pick up. Until that happens, it's likely investors will continue to see tack-on purchases providing nearly all of Middleby's sales gains.

Check out the latest Middleby earnings call transcript.

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