Image: Middleby.

Kitchen-equipment manufacturer Middleby (MIDD -0.01%) has been a big winner over the years from the trend toward more sophisticated technology in assisting with food preparation. Recently, though, Middleby shares have seen those gains stall out, and some believe that its healthiest period of growth might finally be coming to an end. As investors prepare for Middleby's fourth-quarter financial report, they'll be looking to see if the equipment-maker can produce gains in its various business segments that can add up to the impressive growth that got Middleby to where it is today. Let's take an early look at how things have gone for Middleby and what to expect in the latest quarter.

Stats on Middleby

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$550.83 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How can Middleby heat up its earnings?
In recent months, investors have gotten more nervous in their views on Middleby earnings, cutting their fourth-quarter estimates by $0.08 per share and making similar cuts to full-year 2015 and 2016 projections. The stock has also fallen out of favor, declining 14% since mid-November.

Middleby's third-quarter results back in November were mixed, spurring continuing concern about the challenges that the company has faced in trying to adapt its business back in the direction of long-term growth. Revenue performed nicely, growing 11%, but net income fell 18%. Much of the top-line growth was acquisition-related, and Middleby said that its Food Processing Equipment unit suffered a substantial organic sales decline, offsetting some of the gains in Commercial Foodservice. Organic sales in the Residential Kitchen Equipment unit plunged 18%, indicating a rocky start to a promising segment for Middleby's future.

Yet Middleby certain hasn't given up on the residential arena, and in fact, it bolstered its presence with another acquisition in December. The company acquired outdoor food-preparation equipment maker Lynx Grills, which makes built-in and free-standing grills under the Lynx and Sedona brand names. Lynx's equipment has all the hallmarks of quality that you'd expect from Middleby offerings, including hand-crafted construction, heat stabilization, integrated lighting, and hot surface ignition. The proprietary Trident ProSear technology allows for cooking at different temperatures at the same time. Given Middleby's attempt to attract premium customers, the Lynx Grills acquisition should be a move in the right direction for the company.

Middleby's long-range strategy still appears to be intact, even if it doesn't always show up in quarterly numbers. In the long run, CEO Selim Bassoul and his team are trying to make relationships with distribution partners and customers, and they're working to broaden Middleby's reach beyond its commercial beginnings to develop the same strong reputation in the consumer residential market. That exposes Middleby to short-term speed bumps along the way, especially when macroeconomic factors start to affect the ability of potential customers to buy Middleby equipment. Yet eventually, businesses in the food industry and homeowners needing kitchen updates will need sophisticated equipment, and Middleby wants to be in the position to be the go-to provider for that equipment.

In the Middleby report, investors should look for confirmation of the equipment-maker's long-term strategic vision. Sticking to a viable plan despite short-term struggles is actually more of a sign of strength than abandoning a well-thought-out plan in response to them, and Bassoul has the discipline to endure tough times in the expectation of a longer-term reward. Given enough time, Middleby looks to be laying the groundwork to become more of an industry giant in the years to come.