Bob Evans Farms, Inc: Initiation of Research Coverage

Wednesday, May 3, 2017

William Blair & Company initiated research coverage of Bob Evans Farms, Inc. (BOBE $67.41), a leading producer and distributor of branded refrigerated side dishes, pork sausage products, and a variety of complementary and frozen food items, sold in most major retail food channels in the United States.

Analyst Jon Andersen estimated the company would generate revenue of $417 million in fiscal 2017, $470 million in fiscal 2018, and $494 million in fiscal 2019. The company’s fiscal year ends in April.

“Bob Evans projects the refrigerated side dish category will represent roughly three-quarters of its total sales—in pounds—by fiscal 2020,” Andersen said. “A strong value proposition, growth opportunities, and profit profile render this category attractive, in our opinion. The Bob Evans brand is No. 1 in dinner side dishes, and enjoys the highest repeat purchase rate and the highest dollar velocity. Regional variations in household penetration and market share, combined with marketing and capacity, provide opportunity to further develop Bob Evans into a national side dish brand, while recent expansions in manufacturing facilities will provide substantial incremental production capacity.”

Andersen added, “The Bob Evans Restaurants sale enables return of capital to shareholders, prudent capitalization of the remaining business, and a focus on consumer packaged foods—a faster-growing and more profitable business than restaurants. The Pineland Farms acquisition also augments Bob Evans’ capabilities in refrigerated side dishes.”

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