Middleby Corporation - Aggressive Growth
Posted: 4/5/2012 1:00:00 AM
Referenced Stocks: MIDD
Middleby Corporation ( MIDD ) 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 Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
MIDDLEBY CORP ( MIDD ): Free Stock Analysis Report
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