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Why The Middleby Corporation Popped Today

By Brian D. Pacampara, CFA - Feb 26, 2014 at 12:14PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of food equipment company The Middleby Corporation (MIDD 1.78%) surged 13% today after its quarterly results topped Wall Street expectations.

So what: The stock has soared during the past year on better-than-expected growth, and today's Q4 results -- both EPS and revenue surged 29% -- only reinforce that positive trend. In fact, gross margin during the quarter increased 110 basis points to 39.9%, suggesting that Middleby's competitive position is strengthening in the growth process.

Now what: Don't expect Middleby's operating momentum to slow anytime soon. "We continued to make investments in sales and service capabilities in international markets such as Brazil, India, and the Mid-East and realized the benefits of these continuing investments, with strong revenue growth in overseas markets," said Chairman and CEO Selim Bassoul. "Our broad portfolio of innovative products combined with our strong global sales and service infrastructure, positions us extremely well as our customers look for partners to provide equipment solutions to support their restaurant operations around the world." Of course, with the stock now up a whopping 115% over its 52-week lows, and trading at a forward P/E of 30, I'd be cautious about getting too caught up in the excitement.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Middleby. The Motley Fool owns shares of Middleby. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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The Middleby Corporation
$153.49 (1.78%) $2.69

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