Time to sweep the snow off your grills and pour on some charcoal, investors. While winter's just barely passed, it's already cookout time again on Wall Street. Oven maker TurboChef (NASDAQ:OVEN) reports fourth-quarter and full-year 2006 results Thursday afternoon.

What analysts say:

  • Buy, sell, or waffle? Five analysts follow TurboChef, which gets three buy votes and two holds.
  • Revenues. On average, analysts expect 76% quarterly sales growth, to $16.4 million.
  • Earnings. They further predict that net loss will narrow to $0.08 per share, down from $0.25 a year ago.

What management says:
TurboChef's recent big news was actually a reheated plate of items originally cooked up in 2004: Starbucks (NASDAQ:SBUX) has made TurboChef the "exclusive supplier of high-speed ovens for Starbucks' food warming program in company-owned stores in North America." Eat your heart out, Middleby (NASDAQ:MIDD).

The other big news was similarly old hat to anyone who's picked up a copy of The Wall Street Journal, flipped on CNBC, or clicked around Fool.com at any time in the past half-year or so: TurboChef has joined the potential perp-walk of companies under investigation by the SEC for possible stock options backdating. Eat your heart out, UnitedHealth.

What management does:
By giving you companies' margin performance from a trailing-12-month perspective, we aim to help smooth out the quarter-by-quarter fluctuations that pop up from time to time. In practice, though, TurboChef's doing its darnedest to swivel no matter how you try to look at it. I mean, just look at the variance on the top line alone!





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Over the last several quarters, TurboChef's cost of goods sold has been declining as a percentage of sales -- both from the increase in revenue and a decrease in expenses -- and therefore driving margin improvement. Fools will often need to visit TurboChef's website to find the company's previous earnings announcements, because it's inconsistent about publishing them as press releases. According to past reports from the company, TurboChef had an expensive extended warranty program in 2005, and it's been phasing out that program to replace it with a more reasonably priced alternative.

Including warranty costs in its cost of goods sold depressed TurboChef's gross profits heavily in past quarters. It even gave the firm a negative gross margin in the third quarter of 2005, when TurboChef increased the size of its reserves against expected warranty claims. The further we get from that disruptive charge, the more margins should begin to even out, and the easier it should be for us to discern a trend in the firm's profitability.

For more on TurboChef, its archrival, and its most famous customer, nuke these articles for 30 seconds on "high."

Middleby is a Motley Fool Hidden Gems recommendation. To see what new small-cap pastries the Hidden Gems team has baking in the oven, take a free 30-day trial to the newsletter service today.

Starbucks is a Stock Advisor pick. UnitedHealth is both a Stock Advisor and Inside Value selection.

Fool contributor Rich Smith owns shares of UnitedHealth. The Motley Fool has a full disclosure policy.