Middleby (Nasdaq: MIDD)
Posted on : 20-04-2006 | By : RohailR | In : Investing
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I actually wanted to buy stock in this company but it was simply too expensive and I would not have been able to achieve diversification with the number of shares I would have accumalated. Middleby is the stock we’ve picked for the Bender Trust competition. Here are some reasons why we like this stock:
Company: MIDDLEBY CORP, (MIDD) designs, makes, markets and services a broad line of equipment used for the cooking, preparation, serving and storage of food in commercial and institutional kitchens and restaurants throughout the world.
- Sales were up 18.1% for the quarter and 16.8% for the year.
- Earnings improved from a $660,000 loss in Q4 2004 to a $7.2 million gain during the same period in 2005.
- More diverse menu among the restaurants it serves and a demand for more energy-efficient ovens.
- Recently, group president Phil Dolori exercised options for 3,000 total shares within two weeks, even though his combined return on those shares would result in more than an 11-bagger.
- March 8th: Middleby met analyst expectations of $0.91 per share.
- 10.42% increase in Net Margin from Q4 2004. 44.9% increase in accounts receivables. Long-term debt decreased 1.7%. Accounts payable increased 55.6% although we think that their increase in accounts receivables and increased sales will make up for this.
- We believe MIDD has a current value of around $115 per share. Therefore, we believe it is undervalued at the price of $85.92 per share.
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I just got onto youngentrepreneur.com and have been reading posts for the last few days. I just ran across your page this morning. Good content, Im working on the same track as you and enjoy reading your goals and ambitions as mine are of great similarity. I was looking for a “contact me” button. Maybe I was looking too hard. Hit me up.
Cheers
Collin
Hey Collin,
Thanks, man. ye.com is definitely a great source for guys like us. You’ll definitely learn a lot from there. Sorry about that…unfortunately my template doesn’t have a “contact me” section. But if anything, hit me up at rohailr@yahoo.com. Best of luck in all your entrepreneurial endeavors and just keep learning!
-Ro
Just came across your blog surfing the web. I’m also a college student developing my investment and entrepreneurship skills. To be better prepared you for your competition, I think you should know such a dramatic increase in accounts receivable is NOT a good thing. This simply means the company is extending credit to other companies not likely to pay. MIDD takes 97 days to collect on accounts receivable, in comparison to Metso Corp (MX) which only takes 10.5 days. This is something you should be aware of especially if your facing a tough judge. Think about it, your sales are up 18% but your receivables are up 45%. You cannot assume companies will always pay on accounts. Just make sure your group is aware of this and has a solid answer and you should do fine. Either way good luck!!
Hey Alex,
Thanks…that’s really valuable information right there. We definitely have to have an argument for that. Just wondering…how did you know MIDD takes 97 days to collect on AR? I figured that AR would be as good as cash, but I guess one can’t rely on companies to pay on account. Thanks again!
-Ro