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On May 28, 2013, we reaffirmed our Outperform recommendation on The Middleby Corporation (MIDD - Analyst Report) based on a strong first quarter 2013 performance.

Why the Retention?

Middleby reported impressive results for the first quarter 2013, with earnings per share of $1.65, a year-over-year increase of 37.5%. The company’s earnings beat the Zacks Consensus Estimate of $1.30 by 26.9%, primarily led by the Viking acquisition, completed in late December last year.

Middleby generated revenue of $327.5 million, increasing 43.1% year over year. Revenue surpassed the Zacks Consensus Estimate of $314.0 million. The increase in revenue was primarily led by a contribution from the Viking range as well as other acquisitions.

Viking is expected to contribute significantly in the coming quarters as well. Moreover, in the first quarter of 2013, Middleby witnessed a significant 20% hike in revenues from Latin America, the Middle East and Asia. Management also expects that the above regions will continue to show signs of prosperity along with several other emerging markets.

Middleby expects its “Kitchen of the Future” innovation to be an instant hit with its customers. The company expects to have greater number of customers using this technology. Along with this, the induction technology of the company is gaining momentum, thereby increasing revenue generation of the company. After a successful launch of 12 products in 2012, the company is expected to introduce 13 more products in 2013.

Since the announcement of the results, most of the estimates have been revised upwards for 2013 and 2014. The current Zacks Consensus Estimate for 2013 rests at $7.55, an increase of 5.2% over the last 30 days. For 2014, the current estimate increased by 4.3% to $8.88 per share, over the same time frame.

Other Stocks to Consider

Middleby currently carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the industry are Graco Inc. (GGG - Snapshot Report) and Tri-Tech Holding, Inc. , both carrying a Zacks Rank #1 (Strong Buy); while, Colfax Corporation (CFX - Analyst Report) holds a Zacks Rank #2 (Buy).

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