Insights

Why Shares of Middleby Slumped This Week

What happened Shares in commercial and residential kitchen-equipment company Middleby (NASDAQ: MIDD) fell by more than 15% this week as of midday Thursday. There’s little doubt as to why: a falling stock market and Middleby’s disappointing first-quarter earnings release on Tuesday. Two key talking points are reverberating around the industrial sector during the current earnings season, and Middleby is no different. Ongoing supply chain difficulties and surging raw material costs have hit profitability and lowered profit margin expectations. Indeed, Middleby’s first-quarter operating margin was 12.3% compared to 16% in the same period last year. CEO Tim FitzGerald acknowledged significant near-term challenges but also said, “We believe our results will continue to improve in the back half of 2022 and into 2023.”Image source: Getty Images.So whatThe margin pressure is frustrating for a company set for a multiyear recovery in its key commercial foodservice segment. Middleby is seen as benefiting with the dining-out sector recovering from the ravages of the COVID-19 lockdowns, and customers starting to build out facilities again. As such, any downgrade to margin expectations, in a year of recovery, will hit the company harder than most. Now whatInvestors will be hoping Middleby can get a handle on costs and push through pricing increases while the economy stays strong enough to encourage underlying demand. Consumer spending is holding up so far, but rising rates could choke off some demand, not least in residential kitchens. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Middleby. The Motley Fool has a disclosure policy. –

What happened 

Shares in commercial and residential kitchen-equipment company Middleby (NASDAQ: MIDD) fell by more than 15% this week as of midday Thursday. There’s little doubt as to why: a falling stock market and Middleby’s disappointing first-quarter earnings release on Tuesday. 

Two key talking points are reverberating around the industrial sector during the current earnings season, and Middleby is no different. Ongoing supply chain difficulties and surging raw material costs have hit profitability and lowered profit margin expectations. Indeed, Middleby’s first-quarter operating margin was 12.3% compared to 16% in the same period last year. CEO Tim FitzGerald acknowledged significant near-term challenges but also said, “We believe our results will continue to improve in the back half of 2022 and into 2023.”

Image source: Getty Images.

So what

The margin pressure is frustrating for a company set for a multiyear recovery in its key commercial foodservice segment. Middleby is seen as benefiting with the dining-out sector recovering from the ravages of the COVID-19 lockdowns, and customers starting to build out facilities again. As such, any downgrade to margin expectations, in a year of recovery, will hit the company harder than most. 

Now what

Investors will be hoping Middleby can get a handle on costs and push through pricing increases while the economy stays strong enough to encourage underlying demand. Consumer spending is holding up so far, but rising rates could choke off some demand, not least in residential kitchens. 

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Middleby. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!