Bob Evans Farms Inc. Stock Downgraded (BOBE)

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.

NEW YORK ( TheStreet) -- Bob Evans Farms (Nasdaq: BOBE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.1%. 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 -69.17%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BOB EVANS FARMS's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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.

Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans brand name in the United States. It also sells retail gifts, food items, and other novelties in its Bob Evans restaurants, and six Bob Evans restaurants & general stores. Bob Evans Farms has a market cap of $1.25 billion and is part of the services sector and leisure industry. Shares are down 7.1% year to date as of the close of trading on Thursday.

You can view the full Bob Evans Farms Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Markets

Stocks Turn Lower as 10-Year Yield Hits 3%

Stocks Turn Lower as 10-Year Yield Hits 3%

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns

Tuesday's Market Movers: CAT, UTX, KO, MMM

Tuesday's Market Movers: CAT, UTX, KO, MMM

Wall Street Is Totally Forgetting Apple Will Be Giving Away Tons of Cash in 2018

Wall Street Is Totally Forgetting Apple Will Be Giving Away Tons of Cash in 2018

Vivendi Slides After Reports Vincent Bollore Questioned in Corruption Probe

Vivendi Slides After Reports Vincent Bollore Questioned in Corruption Probe