Middleby (MIDD) Down 10.9% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Middleby (MIDD). Shares have lost about 10.9% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Middleby due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Middleby's Q2 Earnings Beat Estimates on Commercial Foodservice Strength

Middleby reported second-quarter 2026 adjusted earnings of $2.35 per share, beating the Zacks Consensus Estimate of $2.28 by 3.1%. The bottom line increased 6.8% year over year. 

Net sales of $876 million topped the consensus estimate of $835 million by 4.6% and rose 9.9% year over year. Commercial Foodservice remained the key growth engine, with organic sales up 8.3% on strong U.S. dealer demand and replacement activity. Total revenues and adjusted EBITDA also exceeded management’s guided ranges.

Commercial Foodservice Sales Rise

Commercial Foodservice sales increased 8.6% year over year to $630.6 million. U.S. and Canada revenues rose 5.9% to $436.8 million, while international sales advanced 15.4% to $193.8 million. 

Management highlighted QSR sales benefited from new product adoptions and higher replacement demand. The U.S. dealer channel also maintained growth, supported by solid market demand, institutional customers and emerging chains. Global order activity for ice and beverage equipment increased ahead of planned menu expansion in 2026.

Middleby's Food Processing Sales Advance

Food Processing revenues climbed 13.3% year over year to $244.9 million, while organic sales increased 1.3%. U.S. and Canada sales edged up 0.8% to $126 million, whereas international revenues jumped 30.4% to $118.9 million. 

Adjusted EBITDA for the segment increased 8.6% to $49.8 million. The adjusted EBITDA margin contracted to 20.3% from 21.2% a year earlier. Middleby completed the Food Processing spin-off on July 6, 2026, launching Midera as a standalone public company. Estimated post-spin adjusted earnings for the quarter were $1.74 per share compared with $1.40 a year earlier.

Margins Face Tariff Pressure

Cost of sales increased 12.4% year over year to $540.5 million, while gross profit rose 6% to $335.1 million. Gross margin narrowed 140 basis points to 38.3%. 

Selling, general and administrative expenses rose 11.3% to $186.6 million. Operating income was nearly flat at $147.7 million, with operating margin declining to 16.9% from 18.6%. Adjusted EBITDA increased 6.4% to $193.2 million, but its margin fell 70 basis points to 22.1% as a less favorable mix, tariffs, inflation and new-product investments pressured profitability.

Middleby Generates Higher Quarterly Free Cash Flow

Operating cash flow increased to $99.7 million from $91.8 million in the prior-year quarter. Capital expenditures were $10.7 million, resulting in free cash flow of $89 million compared with $77.2 million in the year-ago quarter.

Middleby ended the second quarter with $159.2 million in cash and cash equivalents, down from $222.2 million as of Jan. 3, 2026. Long-term debt declined to $1.94 billion from $2.13 billion. The company repurchased 1.4 million shares during the quarter, representing 2.9% of shares outstanding, and ended the quarter with net leverage of 2.4 times.

The Company Sets Post-Spin Q3 Guidance

For the third quarter of 2026, Middleby expects revenues of $620-$640 million, adjusted EBITDA of $143-$150 million and adjusted earnings of $1.67-$1.83 per share. At the midpoints, these imply growth of 4%, 3% and 2%, respectively, from the comparable 2025 period. 

Management expects continued adoption of new products among chain customers and higher replacement equipment demand. Sequential margin improvement is also anticipated, though inflationary pressures are expected to limit organic gains. Operational initiatives at Taylor and lean-manufacturing investments are expected to support margin expansion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -27.87% due to these changes.

VGM Scores

At this time, Middleby has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Middleby has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Middleby is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Watsco (WSO), a stock from the same industry, has gained 0.1%. The company reported its results for the quarter ended June 2026 more than a month ago.

Watsco reported revenues of $2.1 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $4.00 for the same period compares with $4.52 a year ago.

Watsco is expected to post earnings of $4.15 per share for the current quarter, representing a year-over-year change of +4.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Watsco. Also, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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