Episode Details

Middleby (MIDD) Q2 2026 — Q2 2026 (quarter ended July 4; 8-K accepted 7:02am ET Aug 11, BEFORE the open): adjusted EPS $2.35 vs a $2.09 estimate, sales $875.5M vs $837M. The feeds printed $1.74 - the post-spin stub - as a 16.7% miss. The stock fell 7.9%, to $117.91 over four sessions. Middleby beat on revenue and adjusted EPS and RAISED full-year guidance - and the stock fell 7.9%. The number that reached the tape was $1.74, its own preliminary estimate for the post-spin stub, against a $2.09 consensus built for the whole pre-spin company. THE CALL: HOLD (3/5, THE MISS WAS FAKE, THE SELLOFF WAS NOT) — base-case value ~$119 vs ~$117.91 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value about $119 against the $117.91 close on Aug 14; roughly fair after a 9.5% fall. Bull $154, bear $88, weighted 30/45/25. We are BELOW the Street by 23%: FMP consensus 15 buy, 4 hold, 1 sell, post-spin average target $154.50 across 6 targets in the past month. Nobody downgraded on the print - Barclays held Overweight Aug 13, Oppenheimer held Outperform Aug 12. - THE QUARTER (13 weeks ended Jul 4): net sales $875.5M, up 9.9% and up 6.4% organic, against an $837M estimate - a 4.6% beat. Adjusted EBITDA $193.2M vs $181.6M, a 22.1% margin vs 22.8%. Operating income $147.7M vs $147.8M, flat, after $14.5M of transaction costs. GAAP diluted EPS from continuing operations $1.20 vs $1.91; ADJUSTED EPS $2.35 vs $2.20. Shares 45,222,349 off the 10-Q cover. - WHY THE FEEDS SHOWED A MISS: the release labels $1.74 a preliminary estimate of adjusted EPS EXCLUDING Food Processing, to be finalised in Q3 2026 - a company that did not exist during the quarter. The $2.09 consensus was built on continuing operations INCLUDING Food Processing - the same basis on which Middleby reported $2.35. That is a 12.4% BEAT, not a 16.7% miss. The stub itself grew from $1.40 to $1.74, up 24.3%. - THE PORTFOLIO SURGERY: on Feb 2 Middleby sold 51% of its Residential Kitchen Equipment Group to 26North Partners for $564.6M net cash plus a $135.0M note, keeping 49% of Composition Brands and booking a $94.9M pre-tax loss. On Jul 6 it spun off Food Processing as Midera Food Processing (Nasdaq: MFP), one share per MIDD share, record date Jun 26 - two days after the quarter closed, so Q2 still contains Food Processing. - WHAT ADJUSTED EARNINGS LEAVE OUT: the retained 49% of Composition Brands absorbed $28.9M of losses net of tax in its first quarter of equity accounting - $0.64 a share, the largest item in the GAAP-to-adjusted bridge - arriving on a ONE-QUARTER LAG under hypothetical-liquidation-at-book-value, because 26North holds preferences. Carrying value has fallen from $155.2M to $109.7M. The $135M note is $125M non-interest-bearing. - THE PURE PLAY AND THE VALUATION: FY2026 guidance is $2.48B-$2.53B of sales, +7% organic, $572M-$588M adjusted EBITDA and $6.73-$6.89 adjusted EPS vs $2.35B, $551.3M and $6.10 in FY2025. Q3 is guided to $1.67-$1.83 on just +4% organic vs the +8.3% just delivered. At $117.91 that is 17.3x the EPS guide midpoint and 11.8x EV/EBITDA on a $6,824M EV. Q2 leverage 2.4x, 2.7x post-spin; $565.9M of stock retired this year at $149.18. What to watch: UP: the Nov 11 print beating the +4% organic guide against the +8.3% just delivered. DOWN: organic growth settling at +4% while the retained 49% of Composition Brands keeps writing down. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.