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Why Bob Evans Farms (BOBE) Is Falling Today

NEW YORK (TheStreet) -- Bob Evans Farms (BOBE) was falling 8.9% to $47.14 Wednesday after missing analysts' estimates for earnings and revenue in the fiscal third quarter.

The restaurant operator and food distributor posted earnings of 30 cents a share. That's 27 cents below the 57 cents a share analysts surveyed by Thomson Reuters estimated. Revenue declined 21.7% from the year-ago quarter to $340.1 million. Analysts predicted revenue of $350.5 million for the quarter.

Same-store sales for Bob Evans Restaurants fell 1.8% in the quarter. Severe winter weather likely had an impact on the results, as the company notes same-store sales in its 47 core locations in Florida rose 4.4%.

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TheStreet Ratings team rates BOB EVANS FARMS as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BOB EVANS FARMS (BOBE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BOBE's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $23.07 million or 11.75% when compared to the same quarter last year. In addition, BOB EVANS FARMS has also vastly surpassed the industry average cash flow growth rate of -57.23%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for BOB EVANS FARMS is rather low; currently it is at 20.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.83% significantly trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 45.9% when compared to the same quarter one year ago, falling from $11.31 million to $6.12 million.
  • You can view the full analysis from the report here: BOBE Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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