(MIDD - Analyst Report
is a Zacks #1 Rank (Strong Buy) after a big positive earnings surprise and increased earnings estimates.
The Middleby Corporation engages in the design, manufacture,
marketing, distribution and service of commercial foodservice and
food processing equipment. The company's Commercial Foodservice
Equipment Group segment manufactures cooking equipment for
restaurants and institutional kitchens. The Middleby Corporation
was founded in 1888 and is based in Elgin, Illinois.
MIDD Produces Positive Surprise in Two of Last Three Quarters
MIDD has beaten the Zacks Consensus Estimate in three of the last
five quarters. One of those quarters was an earnings meet,
another was an earnings miss. Over the course of the last three
beats, Wall Street showed little if any interest with the stock
moving higher by 3% only one time.
While the most recent beat was a large one, the four previous were
not huge beats. Excluding the most recent positive earnings
surprise, MIDD had posted an average beat of 3% and the end effect
on the stock was basically neutral.
MIDD Recent Huge Beat
On March 9, 2012 the company reported revenue of $244 million
roughly $9 million less than the Zacks Consensus Estimate and
higher than the $207 million reported in the year ago period. EPS
of $1.87 was $0.57 ahead of the estimate or a 43% beat.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $5.51 in February 2012 to the current
level of $5.80.
MIDD carries some reasonable valuation metrics, even if most of
them are higher than the industry average. MIDD's trailing twelve
months PE of 19x is higher than the 12x industry average, but the
forward PE carries a slightly lower premium of 17x versus the 11x
industry average. The price to book metric of 3.7x shows MIDD
trading a full point and a half above the industry average and
price to sales is roughly three times higher as well. All of
these metrics point to a lofty valuation for a mundane maker of
pots and pans, but you are the leader in the industry, you
deserve the premium valuation.
The price and consensus chart shows how the stock has consistently
traded above earnings estimate expectations. This is no doubt due
to the fact the company is a market leader in its industry and has
consistently grown earnings. Aggressive growth investors look for
this sort of historical performance that is coupled with continued
higher future growth expectations. MIDD is a Zacks #1 Rank (Strong
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor