NEW YORK (TheStreet) -- Bob Evans Farms (BOBE) shares are dropping, down -1.5% to $45.07, on Thursday after being downgraded to "underweight" from "equal weight" by analysts at Stephens & Co., who also lowered the company's price target to $40 from $46.
The company reported first quarter revenue of $326.3 million on Tuesday, falling short of analysts expectations of $328.6 million, yielding earnings of 10 cents per share that was in line with analysts expectations.
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 strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.5%. 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BOB EVANS FARMS reported lower earnings of $1.18 versus $2.92 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.18).
- Even though the current debt-to-equity ratio is 1.24, it is still below the industry average, suggesting that this level of debt is acceptable within the Hotels, Restaurants & Leisure industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.09 is very low and demonstrates very weak liquidity.
- 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 112.1% when compared to the same quarter one year ago, falling from $8.38 million to -$1.02 million.
- The share price of BOB EVANS FARMS has not done very well: it is down 7.01% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: BOBE Ratings Report
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.