The Middleby Corporation (MIDD), Brinker International, Inc. (EAT): When Restaurant Competition Heats Up, This Company Benefits

International growth
Like the restaurants it serves, Middleby benefits from international growth. When companies like Yum! Brands, Inc. (NYSE:YUM) and Domino’s Pizza expand into Asian markets, these companies bring along ovens from Middleby. Domino’s gave Middleby an award in 2001, demonstrating the importance of this partnership.

In fact, Yum! Brands, Inc. (NYSE:YUM) has also benefited from Middleby’s energy efficient ovens. Yum! China was so impressed with Middleby that it also gave the company an award, in this case the “Bridge Builder Award.” Middleby’s Australian site reported this news, which helps showcase the company’s operations in Australia as well.

The partnership could also be meaningful for Yum! Brands. The company has a PEG ratio of 2.07 according to Yahoo! Finance, which is not really appealing, although it does have a 1.8% forward yield. Yum! China offers top-line potential, and with Middleby’s help, Yum! Brands, Inc. (NYSE:YUM) might also show some bottom-line improvements in the future.

Takeaway
The Middleby Corporation (NASDAQ:MIDD) offers exposure to the major growth trends in the restaurant industry, such as international expansion and the rise of fast casual. This supplier also works with many major restaurant chains, so even if one restaurant stumbles, the company could still post good results. Middleby also continues to work on ways to cook food even faster, which could make its ovens even more attractive. With a forward P/E of 23, Middleby isn’t cheap, but its growth opportunity could make this company worth the risk.

The article When Restaurant Competition Heats Up, This Company Benefits originally appeared on Fool.com and is written by Eric Novinson.

Eric Novinson has no position in any stocks mentioned. The Motley Fool recommends Middleby. The Motley Fool owns shares of Middleby.

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