Midd Toaster
Image: Middleby.

As a manufacturer of commercial kitchen equipment like ovens and refrigerators, Middleby (NASDAQ:MIDD) has benefited from trends that have made people more aware of the food they eat, as a favorable restaurant environment puts Middleby's customers in a better financial position to buy its equipment. Coming into its third-quarter financial report on Thursday, Middleby investors are expecting modest gains in sales and earnings, but they're hoping that after having thwarted would-be rival bidder Whirlpool (NYSE:WHR) in a major acquisition, Middleby will see even faster growth in the near future. Let's take an early look at what's been up with Middleby lately and what we could see in its results.

Stats on Middleby

Analyst EPS Estimate

$1.06

Change From Year-Ago EPS

9.3%

Revenue Estimate

$446.45 million

Change From Year-Ago Revenue

10.4%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can Middleby keep warming up?
Investors have had mixed views on Middleby earnings in recent months, cutting their near-term projections but boosting their views for 2016. The stock hasn't made much of a move lately, falling about 3% since early August.

Middleby's second-quarter results back in August set the stage for the stock's lackluster performance. Revenue growth slowed to less than 3% compared to the year-earlier period, and the rise in earnings was also less than many of those following the stock had wanted to see. Major acquisitions hid Middleby's inability to generate extensive organic sales growth, and some of the disruptions caused by having new product lines to integrate had a negative impact on the company's overall results.

Yet Middleby remains committed to growing through acquisition, even though the company ran into some unexpected drama during the quarter. Coming into the quarter, investors thought that Middleby's agreement to buy out U.K.-based AGA Rangemaster Group was largely a done deal. Yet in September, Whirlpool interposed itself into the acquisition process, releasing a statement that said that it had approached AGA Rangemaster with a possible offer. In order to comply with the special takeover requirements under U.K. law, though, Whirlpool only announced the possibility of an offer rather than an actual formal offer itself, and later in the month, AGA Rangemaster confirmed that it had ended any merger talks with Whirlpool, instead moving forward with the Middleby deal that AGA's shareholders had approved.

Middleby investors seem optimistic that the company's merger and acquisition activity will lead to accelerating growth. Currently, the consensus forecast for 2015 earnings growth is running at about 18%, with revenue growth expected to come in at 14%. For 2016, however, those figures jump to 23% and 30% respectively, and the long-term impact of positive synergies on earnings growth could be larger still. As CEO Selim Bassoul said, "We will leverage the existing sales, service, and manufacturing capability of AGA with the Middleby market expertise, product innovation, and well-established global distribution network."

One minor hiccup during the period involved the resignation of Middleby Audit Committee member Sabin Streeter. Because of the resignation, Middleby was out of compliance with Nasdaq requirements for three independent directors on the audit committee. Fortunately, Middleby has until next March at the earliest to fix the problem without running the risk of losing its listing on the Nasdaq exchange.

In the Middleby report, investors need to look more closely at exactly how the company's newly acquired companies are fitting together into a cohesive whole. It might take time for Middleby to figure out the optimal strategy for moving forward with a broader set of product offerings, but once it does, the company should have every opportunity to focus its efforts on squeezing more profit from the products with the highest potential and meet the needs of its growing base of customers.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.