Restaurant chain Bob Evans Farms (NASDAQ:BOBE) will report a full plate of fourth-quarter and full-year 2007 financial results on Monday, June 4.

What analysts say:

  • Buy, sell, or waffle? It's slim pickings finding analysts to cover Bob Evans, but the three who do rate it a hold.
  • Revenues. Of the three, only one was brave enough to venture a guess for the quarter's sales, predicting a 3% increase to $409.7 million. Two analysts offered full-year estimates, both of whom peg it at a 4% increase to $1.65 billion.
  • Earnings. Everyone had an opinion on profits, though. The consensus was that like grease sliding off bacon, earnings would fall 21% for the quarter to $0.37 per share, while for the year they would be up 15% to $1.54 per share.

What management says:
While we like to concentrate on the finger lickin' restaurant side of Bob Evans, the company is also a food processor which has generated $200 million in sales and $11.9 million in operating profits year to date, about 16% of both totals. The company recently announced that it would become an "international" company for the first time as it will be selling sausages and other breakfast items to stores in Canada, including 250 Wal-Mart (NYSE:WMT) stores.

Management is slowing the growth of its Bob Evans restaurant chain, while continuing to support the expansion of its French cafe-style Mimi's Cafe. Yet the Bob Evans concept has been experiencing continued same-store sales growth with minimal support from increases in average menu prices. Mimi's Cafe, on the other hand, has enjoyed larger comps, but also larger increases in menu prices. In April, for example, Mimi's saw comps rise 1.9%, but had a 5% rise in menu prices.

Chairman and CEO Steve Davis says Mimi's Cafe "continues to generate favorable unit sales and strong returns on investment, making it an attractive long-term growth vehicle for the company."

What management does:
Bob Evans has been benefiting from low hog costs which has boosted the food products segment's operating income 30.3% from the year-ago period. Yet as corn prices continue to rise as demand for ethanol and other products remains strong, feed costs could rise as well, eating into those better margins.

Margin

01/06

04/06

07/06

10/06

01/07

Gross

33.3%

34.1%

34.6%

34.7%

35%

Operating

4.6%

5.4%

6%

6%

6.4%

Net

2.5%

3.5%

3.8%

3.8%

4%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
In the year since Steve Davis put on the chef's hat at Bob Evans, the company's operational problems have been less pronounced and the stock has responded well, rising about 35% over that timeframe. Twelve-month operating income has risen 39% while there was a corresponding 65% increase in net income.

While that is a significant improvement, it's still putting a rich price on its stock. Bob Evans trades at around 22 times next year's earnings, ahead of Denny's (NASDAQ:DENN) at 20, and at about a 35% to 60% premium to both Smithfield Foods (NYSE:SFD) and CBRL Group (NASDAQ:CBRL), respectively. I prefer my margin of safety slices to be thicker than what Bob Evans is serving up today.

Related Foolishness:

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Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.