Forget Middleby, Buy These 4 Rising Industrial Stocks for 2025

Year 2024 has not been a smooth one for The Middleby Corporation MIDD. The leading manufacturer of kitchen equipment and foodservice provider has been experiencing business challenges due to the weakness in the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group segments, high debt level, and forex woes.Middleby, which has a market capitalization of $7.3 billion, surpassed earnings estimates twice in the four trailing quarters and missed the mark in other two, the average surprise being 0.2%. The company’s third-quarter 2024 earnings missed the estimate by 5.7% and sales lagged the same by 5.5%. The company’s bottom and top lines decreased 1.7% and 3.9% year over year, respectively, in the third quarter of 2024. Image Source: Zacks Investment Research This Zacks Rank #4 (Sell) stock has lost 7.7% against the industry’s 15.2% growth in the year-to-date period. Further, the Zacks Consensus Estimate for 2025 earnings has moved south over a couple of months from $9.63 to $9.13. This indicates bearish sentiments for this stock, as six estimates moved downward.What is Ailing Middleby?Middleby has been struggling with underperformance in the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group segments. Lower demand for residential kitchen products due to weakness in the housing market, amid lower existing and new home sales, is affecting the performance of the Residential Kitchen Equipment Group segment. Also, tough market conditions, both domestically and in Europe, remain concerning for the segment.Softness in the restaurant industry, due to declining traffic, is affecting the demand for the company's products within the Commercial Foodservice Equipment Group segment. Also, high wages and recent food cost inflation have pressured restaurant operators, leading to delayed investments and more restaurant closures, which are alarming for the segment as well.High debt levels raise financial obligations and hurt Middleby’s profitability. The company's long-term debt in the last five years (2019-2023) witnessed a CAGR of 27.3%. At the end of third-quarter 2024, the metric remained high at $2.36 billion. Also, the stock looks more leveraged than the industry. Its long-term debt/capital ratio is currently 0.40, higher than 0.36 of the industry. Its debt/equity ratio of 0.67 is above the industry's 0.65. This makes us cautious about the stock.International businesses expose Middleby to risks arising from geopolitical issues and unfavorable movement in foreign currencies. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry. In the third quarter of 2024, forex woes negatively affected the Commercial Foodservice segment’s sales by 0.1%.Our RecommendationAmid such a scenario, we can consider the following four industrial stocks instead of Middleby, which are likely to offer good returns. These stocks either sport a Zacks Rank #1 (Strong Buy) or carry a Zacks Rank #2 (Buy), and have a healthy earnings surprise history. Also, these stocks have robust earnings growth expectations, evident from positive estimate revisions. You can see the complete list of today’s Zacks #1 Rank stocks here.Graham Corporation GHM: Based in Batavia, NY, the company is engaged in manufacturing fluid, power, heat transfer and vacuum technologies for sectors such as chemical, petrochemical, defense, space and energy. It also offers rocket propulsion systems with turbopumps, fuel and nuclear fluid pumps and cooling systems, including pumps, compressors, etc for the space industry. The company is benefiting from solid momentum in the defense industry, driven by an increase in new and existing programs. Growing sales in the refining and chemical/petrochemical markets, driven by favorable timing of larger capital projects, bode well. Image Source: Zacks Investment Research The Zacks Rank #1 stock has gained137.6% in the year-to-date period. The company surpassed estimates thrice in the  trailing four quarters and missed the mark in one, the average earnings surprise being 101.8%. The Zacks Consensus Estimate for its fiscal 2025 (ending March 2025) earnings has been revised 8.4% upward over the past 60 days.Generac Holdings Inc. GNRC: Headquartered in Waukesha, WI, Generac is a leading manufacturer of backup and prime power generation systems for residential and C&I applications, solar + battery storage solutions, advanced power grid software platforms and services. It is well-positioned to gain from higher Residential product sales, driven by increasing demand for home standby and portable generators. Also, investment in Wallbox bodes well for the company. Image Source: Zacks Investment Research Shares of the Zacks Rank #2 company have gained 27.8% in the year-to-date period. GNRC outpaced estimates in three of the trailing four quarters and missed the mark in one, the average earnings surprise being 10.1%. The Zacks Consensus Estimate for current-year earnings has been revised 5.6% upward over the past 60 days.Applied Industrial Technologies, Inc. AIT: The company is a distributor of value-added industrial products, including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. AIT is benefiting from solid momentum in the Service Center Based Distribution segment, driven by its strong position in the food and beverage, primary metals and transportation markets. The increase in demand for fluid power MRO services across the U.S. manufacturing sector, driven by growing digitization and higher investment in maintenance operations, is also supporting the segment’s revenues. Image Source: Zacks Investment Research The Zacks Rank #2 stock has gained 47.3% in the year-to-date period. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 4.9%. The Zacks Consensus Estimate for its fiscal 2025 (ending June 2025) earnings has been revised 0.7% upward over the past 60 days.RBC Bearings Incorporated RBC: Headquartered in Oxford, CT, RBC manufactures and distributes engineered bearings and precision components. The company is benefiting from strength in its Aerospace/Defense unit, driven by solid momentum in the commercial aerospace market, arising from strong growth in orders from the aftermarket verticals. An increase in demand for its bearings and engineered component products in the defense market also bodes well. Image Source: Zacks Investment Research Shares of the Zacks Rank #2 company have gained 12.5% in the year-to-date period. RBC Bearings surpassed estimates twice in the trailing four quarters and missed the mark in other two, the average earnings surprise being 2.5%. The Zacks Consensus Estimate for its fiscal 2025 (ending March 2025) earnings has been revised 0.5% upward over the past 60 days.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RBC Bearings Incorporated (RBC): Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report The Middleby Corporation (MIDD): Free Stock Analysis Report Graham Corporation (GHM): Free Stock Analysis Report Generac Holdings Inc. 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