Kitchen product manufacturer Middleby (NYSE:MIDD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 2.2% year on year to $906.6 million. Its non-GAAP profit of $2.08 per share was 5.3% above analysts’ consensus estimates.
Revenue: $906.6 million vs analyst estimates of $941.7 million (2.2% year-on-year decline, 3.7% miss)
Adjusted EPS: $2.08 vs analyst estimates of $1.97 (5.3% beat)
Adjusted EBITDA: $182.1 million vs analyst estimates of $185.7 million (20.1% margin, 1.9% miss)
Operating Margin: 15.5%, in line with the same quarter last year
Free Cash Flow Margin: 11.8%, down from 13.7% in the same quarter last year
Organic Revenue fell 3.8% year on year (-8.7% in the same quarter last year)
Market Capitalization: $7.26 billion
“Middleby has a demonstrated track record of operational excellence, strong cash flow generation and disciplined capital investments, which provides the foundation for our attractive capital allocation framework," said Tim FitzGerald, CEO of The Middleby Corporation.
Company Overview
Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE:MIDD) is a food service and equipment manufacturer.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Middleby’s 5.5% annualized revenue growth over the last five years was tepid. This was below our standard for the industrials sector and is a rough starting point for our analysis.
Middleby Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Middleby’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.4% annually.
Middleby Year-On-Year Revenue Growth
We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Middleby’s organic revenue averaged 4.3% year-on-year declines. Because this number is lower than its normal revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.
Middleby Organic Revenue Growth
This quarter, Middleby missed Wall Street’s estimates and reported a rather uninspiring 2.2% year-on-year revenue decline, generating $906.6 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months. While this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.
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Operating Margin
Middleby has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Middleby’s operating margin rose by 4 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Middleby generated an operating profit margin of 15.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Middleby’s EPS grew at an unimpressive 6.6% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 5.5% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Middleby Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into Middleby’s earnings to better understand the drivers of its performance. As we mentioned earlier, Middleby’s operating margin was flat this quarter but expanded by 4 percentage points over the last five years. On top of that, its share count shrank by 1.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
Middleby Diluted Shares Outstanding
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Middleby, its two-year annual EPS growth of 2.9% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q1, Middleby reported EPS at $2.08, up from $1.86 in the same quarter last year. This print beat analysts’ estimates by 5.3%. Over the next 12 months, Wall Street expects Middleby’s full-year EPS of $9.63 to grow 4%.
Key Takeaways from Middleby’s Q1 Results
It was encouraging to see Middleby beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed significantly and its organic revenue fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 3.2% to $131.01 immediately following the results.
Middleby may have had a tough quarter, but does that actually create an opportunity to invest right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
