Bob Evans Farms Inc. (BOBE) increased its dividend in Nov 2009 by 12.5% and also announced further stock repurchases of up to million shares as the company felt confident in its financial strategy going into 2010. The company is expected to report fiscal third quarter 2010 results on Feb 9.

Bob Evans Farms operates restaurants under the Bob Evan’s and Mimi Cafe brands across the country. It also distributes pork sausage products under the Bob Evans and Owen brands.

Since I last reviewed the company in June 2009, it has surprised on estimates the next two quarters and now has a surprise streak of 4 beats in a row.

The company is being hit hard as consumers pull back on eating out. In the fiscal second-quarter 2010, reported in early Nov 2009, restaurant net sales fell 3.3% compared to the year ago quarter with same-store sales at Bob Evans restaurants down 2.8% and at Mimi’s Cafe they fell 6.8%.

However, the company saw a jump in its food product segment as more consumers ate at home. Sales rose 1.6% as pounds sold of comparable products increased 10% compared to the year ago quarter (sales were impacted by promotional discounts to retailers relative to the increase in the pounds sold.)

This increase helped offset the losses on the restaurant side of the business.

“Despite the challenges in our restaurant segment, our strong performance in the food products segment and effective cost management gives us the confidence to reaffirm our operating income outlook for the 2010 fiscal year,” said Steve Davis, CEO.

Zacks Consensus Estimates Rise

The third quarter Zacks Consensus Estimate is up 1 cent to 61 cents in the last 60 days. The fiscal 2010 Zacks Consensus has also climbed a penny to $2.28 in that same time period. Analysts expect earnings growth of 8.41%.

Value Fundamentals

Bob Evans is a Zacks #2 Rank (buy) stock. It still has attractive value characteristics. The company is trading with a forward P/E of 12.4 and a price-to-book ratio of 1.39. Bob Evans also has a 1-year return on equity (ROE) of 11.76%.

The company’s dividend is currently yielding 2.50%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

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