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Bob Evans Farms, Inc. Message Board

  • golfer18us golfer18us Mar 28, 2014 2:56 PM Flag

    Destroying value

    I've never understood why some folks think this is a well run company and value it so highly (current PEG ratio is 3x...insane). Here's a company that owns most of its underlying real estate yet still delivers very poor operating margins. Imagine if they did the sale leaseback that some activists have suggested? They'd have real rent on those sites and operating margins would go down probably 4-6 points. I'm not suggesting they do a sale leaseback. Merely pointing out that their operating margins should be significantly higher given that they don't pay as much rent as a typical restaurant chain would pay (most chains don't own their real estate; they lease). It points to the fact that their store level economics are not good.

    And...it appears to be getting worse as management has pumped up capital expenditures for remodels that don't seem to be working....or at least they aren't achieving an acceptable return on investment. Heck, their current overall returns are pathetic (check out their ROA and ROE...both bad).

    It's been long enough for the current CEO. While Mimi's was purchased prior to his arrival, they continued to open a ton of locations....and spend a ton of capital despite the continued decline in same-store sales....and then proceeded to sell it for a huge loss.

    They need to make a change at CEO and on the board (many of the board members have no real industry experience). If not, more shareholder value will get destroyed as they do remodels that don't work (not to mention spending on a new corporate office that wasn't necessary).

    Sentiment: Sell

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    • this stock pays a 3.5% dividend and grows it 10% plus a year. I hope you go buy mnkd or fb or something. Why do all these private equity vultures always go to the most undervalued companies? To give this company away to private equity has got to be the dumbest thing to do.

    • Replace Red Lobster, with BOBE and it sounds very familiar!

      The investment group, Starboard Value, is pushing for a special meeting to be held before the 2014 annual shareholder meeting, held in the fall. Starboard Value argues the separation of Red Lobster from Darden “is the wrong spin-off, at the wrong time, and for the wrong reasons.”

      Its reasoning stems from the integrity of Red Lobster’s real estate, which it states is extremely valuable.

      According to Starboard’s research, Darden’s real estate is worth, at minimum, around $4 billion. Instead of spinning off Red Lobster, Starboard is looking to separate the real estate—either through an outright sale, a Real Estate Investment Trust (REIT) spin-off, or a merger with an REIT.

    • BOBE is currently heavy into stock buybacks and that is not as risk free as many believe.
      Similar buybacks were very popular back in 2007 as markets peaked before their 2008 collapse.
      Analyst's were promoting stock buybacks in 2007 as a benefit to stock holders. This is where being older and having invested though so many cycles comes in handy! An example of a company that did 2007 buybacks is Safeway. Safeway, a company familiar to many that follow BOBE, did aggressive stock buybacks in 2007, and are just now above their 2007 price, and they can thank Kroger and the Private
      Equity market for that. Sound familiar??? It does to this simple street investor. Will it be the Street or the Private Equity market that will propel BOBE higher?? I am thankful for the superior educational background of the diverse team assembled at BOBE that's leading them through these turbulent waters, not like those old hicks that use to call the shots, to help me make my BOBE buy, hold, sell decision. There's a lot money on the table boys and girls in New Albany, make the right decisions!

    • Golfer, it's all about the coffee or the koolaide!

 
BOBE
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