Bob Evans Farms Inc.

Bob Evans Farms, Inc. (BOBE) is seeing strength at its value priced Bob Evans restaurant chain and its pork products as consumers look to cut dining costs. The company has surprised 3 out of the last 4 quarters by an average of 17.68%.

Company Description

Bob Evans Farms operates restaurants under the banner of Bob Evans and Mimi's Cafe and also produces pork sausage and convenience food products under the Bob Evans and Owens brand names.

The company operates 570 Bob Evans in 18 states in the Midwest, mid-Atlantic and Southeast. It also owns 144 Mimi's Cafes in 24 states, with the majority being in California and the West.

Bob Evans is known for its breakfast menu but serves breakfast, lunch and dinner while Mimi's Cafe is a casual dining chain.

Bob Evans Surprised by 76.92% in the Fiscal Fourth Quarter

On June 2, Bob Evans reported fiscal fourth quarter 2009 results which saw net income rise by 31% to $21.1 million compared to $16.1 million in the year ago quarter. Earnings per share were 69 cents compared to analysts' estimates of only 39 cents.

Sales fell 1.2% to $431 million from $436.4 million in the same period a year ago as same store sales declined at both Bob Evans Restaurants and Mimi's Cafe. However, sales did rise 1.5% in the food products segment.

Bob Evans Restaurants outperformed the higher priced Mimi's Cafe as same store sales fell 1.6% at Bob Evans Restaurants while they declined 7.1% at Mimi's Cafe. Curing the quarter, both were able to increase average menu prices, by 3.2% at Bob Evans and 1.5% at Mimi's.

Reduced labor and food costs also helped boost the quarter.

Outlook for Fiscal 2010

Net sales are forecast to increase 1.5% to 2%. Bob Evans same store sales are expected to be negative 1.5% to 2% with flat net sales. Mimi's Cafe is forecast to see net sales growth 3% to 4% while same-store sales remain negative in the range of 3% to 5%.

In the food products segment, the company expects overall sales growth of 5% to 6%.

Consensus Estimates Move Higher

Covering analysts are bullish about fiscal 2010. First quarter 2010 estimates climbed 6 cents to 48 cents in the last month.

2010 consensus estimates jumped 74% to $2.18 from $1.83 per share in the last 30 days as 7 out of 7 analysts raised estimates during that period.

Value Fundamentals

Bob Evans Farms is a Zacks #1 Rank (strong buy). It has a forward P/E of 14.28 and a price-to-book ratio of 1.58. The company has a 1-year return on equity (ROE) of 10.55%. It also pays a dividend with a current yield of 2.10%.

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