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The Middleby Corporation (MIDD - Analyst Report) is set to report fourth quarter 2012 results on Feb 26. Last quarter it posted a 4.6% positive surprise. Let’s see how things are shaping up for this company.

Growth Factors this Past Quarter

Middleby has been largely hurt by the economic downturn in Europe, considering that a significant portion of its revenue is generated in that part of the world. Also, due to its operations in various regions outside the US, the company is exposed to foreign currency risks, which impacted the revenue negatively in the third quarter. However, recent acquisitions of Viking Range and Nieco Corporation helped Middleby stabilize the above negative effects and increase the revenue.  

Earnings Whispers?

Our proven model does not conclusively show that Middleby is likely to beat earnings this quarter. This is because a stock needs to have both a positive ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Negative Zacks ESP: The Earnings ESP is 2.8%.This is because the Most Accurate estimate stands at $1.73 while the Zacks Consensus Estimate is higher at $1.78. This comes to a difference of -2.8%.

Zacks #3 Rank (Hold): Middleby’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other general industrial companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

Altra Holdings Inc. (AIMC - Snapshot Report), Earnings ESP of 4.7% and a Zacks Rank #1 (Strong Buy)

Avery Dennison Corporation (AVY - Analyst Report), Earnings ESP of 1.8% and a Zacks #1 Rank (Strong Buy)

Graco Inc. (GGG - Snapshot Report), Earnings ESP of 1.4% and a Zacks #2 Rank (Buy).

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