Strong Cash Yield: Is Middleby Stock A Buy?

Middleby (MIDD) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With MIDD

MIDD may be down -18% so far this year but is now trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also belowits 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company: Middleby reported Q3 2025 total revenue exceeding guidance, driven by a 1.6% organic growth in Commercial Foodservice and a 13.2% sales increase in Food Processing, despite a slight overall organic sales decline. An improving order rate and growing backlog, including $250.7 million for Food Processing extending into 2026, underpin future performance. Strategic moves, like the planned Food Processing spin-off and the recent acquisition of Oka-Spezialmaschinenfabrik, aim to enhance focus and product offerings. New innovation centers and a B2B platform for commercial foodservice further strengthen customer engagement. Q4 2025 revenue guidance of $990 million to $1.02 billion signals continued momentum.

MIDD Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 10.5%, but Middleby stock does
• Strong Margin: Last 12 month operating margin of 17.2%
• Growth: Last 12 revenue growth of 0.3% – low growth, but this selection is all about high yield and margin
• Valuation: MIDD stock currently trading at 35% below 2Y high, 18% below 1M high, and at a PS lower than 3Y average.

Below is a quick comparison of MIDD fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While MIDD stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. MIDD fell nearly 49% in the Dot-Com bubble and took an even bigger hit, 73%, during the Global Financial Crisis. The 2018 correction and the inflation shock both dragged it down around 30-44%. The Covid selloff wasn’t gentle either, with losses over 60%. Shows that even solid companies can face sharp drops when the market turns south. Risk is real, no matter the setup. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read MIDD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell MIDD Stock.

Stocks Like MIDD

Not ready to act on MIDD? Consider these alternatives:

1. PayPal (PYPL)
2. Global Payments (GPN)
3. Zimmer Biomet (ZBH)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few year average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Smart Investing Begins With Portfolios

Stocks can jump or crash but long term success comes from staying invested. The right portfolio helps you ride gains and cushion single stock drops

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.