Shares of food service equipment maker Middleby (NASDAQ:MIDD) posted strong gains on Wednesday, rising as much as 24.3% intraday before moderating to close up 13.9%. The company may have missed Wall Street's earnings targets with second-quarter report it delivered early this morning but investors were still impressed by its strong revenues.
In Q2, Middleby's top line rose 15% over the year-ago period to land at $668.1 million. Earnings jumped 12%, stopping at $1.51 per diluted share. Your average analyst had been looking for earnings near $1.57 per share on net sales of roughly $646 million.
Middleby has largely been growing by acquisition in recent quarters, and this past one was no exception: Revenues from new acquisitions accounted for essentially all of the company's year-over-year sales growth.
That being said, management expects organic growth to start gaining some traction in the second half of 2018. On top of that, cost-saving synergies should start making their way onto the income statement as Middleby consolidates a plethora of strategic plug-in buyouts. Therefore, profit margins should improve from here.
Investors breathed a deep sigh of relief over this report's solid revenue gains, and shrugged off the less-impressive results on the bottom line. The stock is still trading 22% lower year-to-date, leaving plenty of room for further improvements.