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Value

Middleby Corporation (MIDD - Analyst Report), which makes equipment for commercial food processing, has surprised on estimates 3 out of the last 4 quarters by an average of 20.96%. The company has a PEG ratio of just 0.63.

Company Description

Middleby Corporation manufactures equipment used for commercial food cooking, preparation and processing such as batch ovens, fryers, and food warmers. It also makes the Wow! Conveyor Oven.

The company's brands for the commercial foodservice industry include Anets, Blodgett, Bloomfield, CookTek and others. The company also provides a number of brands to the food processing industry including Alkar, MP Equipment and RapidPak.

Middleby Saw Record First Quarter Sales

On May 14, Middleby reported first quarter results that easily surprised on Wall Street estimates by 51.67%. Adjusted earnings per share were 91 cents compared with analysts' estimates of 60 cents.

Sales rose 12.8% to $181.5 million from $160.9 million due to several acquisitions. Excluding acquisitions, sales fell 4.2%. On Jan 5, the company closed on its acquisition of TurboChef Technologies Inc. for $116.1 million in cash and shares of Middleby stock.

At the end of the quarter, Middleby also closed on two other acquisitions, CookTek LLC and Anetsberger Brothers, Inc. Neither one of those impacted first quarter earnings or are reflected in the quarterly numbers.

The Commercial Foodservice segment was the winner in the quarter, as sales rose 0.3% due to a large order with a major restaurant chain in support of a new menu item. The Food Processing segment declined 35.6%.

The global recession has impacted customer purchases in both business segments. The company is working on lessening the economic impact of the recession by introducing new products. It successfully launched the Blodgett Hydrovection oven during the first quarter.

Full Year Estimates Rise

Analysts are bullish on the full year but a bit more tentative on the second quarter. Second quarter estimates were down 2 cents to 81 cents in the last 60 days.

2009 consensus estimates, however, spiked 7.4% to $3.47 per share in the last 2 months.

The company is expected to report second quarter earnings on Aug 6.

Value Fundamentals

Middleby is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 11.5 and a price-to-book ratio of 2.60. The company has a stellar 5-year average return on equity (ROE) of 57.79%.

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