NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 41.9% when compared to the same quarter one year prior, rising from $12.55 million to $17.81 million.
- BOB EVANS FARMS has improved earnings per share by 43.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BOB EVANS FARMS reported lower earnings of $1.78 versus $2.28 in the prior year. This year, the market expects an improvement in earnings ($2.38 versus $1.78).
- The gross profit margin for BOB EVANS FARMS is rather low; currently it is at 20.60%. Regardless of BOBE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BOBE's net profit margin of 4.40% is significantly lower than the same period one year prior.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, BOB EVANS FARMS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Bob Evans Farms, Inc., a full-service restaurant company, owns and operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names in the United States. The company has a P/E ratio of 15.9, below the average leisure industry P/E ratio of 17.6 and below the S&P 500 P/E ratio of 17.7. Bob Evans Farms has a market cap of $953.3 million and is part of the
industry. Shares are down 10.5% year to date as of the close of trading on Friday.
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