NEW YORK (TheStreet) -- Shares of Bob Evans Farms Inc. (BOBE) are up 2.7% to $46.43 on Wednesday.
Some analysts, including Hedgeye Risk Management, think it may be due to a delayed reaction over the bidding war for Hillshire Brands (HSH), between Pilgrim's Pride (PPC) and Tyson Foods (TSN).
Bob Evans has its own line of grocery products, including sausage, which could be spun off at a rich valuation.
Separately, TheStreet Ratings team rates BOB EVANS FARMS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BOB EVANS FARMS (BOBE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 110.4% when compared to the same quarter one year prior, rising from -$55.14 million to $5.72 million.
- The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.19 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- BOB EVANS FARMS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BOB EVANS FARMS increased its bottom line by earning $2.91 versus $2.46 in the prior year. For the next year, the market is expecting a contraction of 43.6% in earnings ($1.64 versus $2.91).
- You can view the full analysis from the report here: BOBE Ratings Report