This "dull" old oven maker's second-quarter net income increased 14% to $12.6 million, or $0.75 per share. Sales increased 8% to $113.3 million. All this was achieved despite a work stoppage at its Elgin, Ill., facility. Analysts (all six of them -- it's not a widely followed company) had expected Middleby to generate a mere 6% increase in earnings, or $0.71 per share. However, Middleby was a bit shy on the sales end of things, since they expected 10% revenue growth.
Middleby has been on an acquisitive kick, and a big part of its strategy is to buy businesses that fit into its strategy on the cheap and improve their profitability. In its press announcement, it said that Jade, which it acquired from Whirlpool's
Middleby competes with TurboChef
As it stands, Middleby has proven itself a crown jewel for Motley Fool Hidden Gems; Tom Gardner recommended it in November 2003 and re-recommended it two subsequent times, as well. These entry points have produced returns of 672%, 202%, and 116%, respectively. Tom has often dubbed CEO Selim Bassoul one of his favorite company heads. I can see why; at various times when I have checked out Middleby's conference calls, I have felt that Bassoul tends to show a great deal of knowledge about his company and industry, speaking about strong demographic trends that Middleby's business can capitalize on.
Is it too late? A forward P/E of 20 just about matches Middleby's expected 20% increase in 2008 earnings, so it doesn't sound outrageously overvalued, especially considering its tendency to exceed expectations. Given the long-term view and Middleby's historical success, Foolish investors might want to think about whether boring is beautiful.
Cook up further Foolishness:
- Check out Rich Smith's Foolish Forecast for Middleby.
- Revisit Middleby's first quarter.
- Middleby sizzled in March.
As you've already seen, Middleby is a Motley Fool Hidden Gems recommendation -- the July issue included Tom Gardner's most recent update on this stock, so click here to read more, free for 30 days.