I'll be honest with you. I don't trust Bob. He keeps changing his story, he makes too many excuses, and now he's looking to a little old lady to bail him out of his troubles. What on earth am I talking about? Well, Bob Evans (NASDAQ:BOBE), of course. The company reported its fiscal third-quarter results, and once again, it missed the mark. The company has had a string of disappointing quarters lately, coming in ahead of estimates last quarter simply because it had warned of lower profits.
In its most recent quarter, Bob Evans earned $6.6 million, or $0.19 per share, less than half the $15.6 million, or $0.44 per share, it earned a year ago. Total sales managed to climb 31% to $381 million, but that was largely the result of the company's July acquisition of Mimi's Cafe. Although total sales were higher, comp sales fell by 3.9% despite a 1.8% increase in menu prices.
Perhaps I'm being too harsh on Bob Evans. The company was kind enough to warn us last week (thanks for the heads-up!) that profits would be considerably lower than expectations of $0.25 per share.
But then I looked at operating margins and saw that they plummeted 86% from last year. The company was quick to blame high hog prices, but it has been aware of that for some time now. And sure, hog prices soared 48.5% from last year, but at $52 per hundredweight, the cost increased only 4% since last quarter.
The company is looking to Mimi's Cafe to help get it out of its rut, and the purchase seems to be one of the few bright spots for Bob Evans, as same-store sales for the cafe climbed 3.9%. However, with 88 restaurants vs. 587 for Bob Evans, I don't expect Mimi to be capable of fixing Bob's woes on her own.
Bob Evans doesn't seem to think so, either, and lowered its full-year profit forecast to a range of $1.10 to $1.15 per share. That's down from the $1.17 per share analysts forecast and much lower than the $1.47 analysts were predicting back in November.
With a plethora of more appealing (I'm talking dining as well as investing) options out there, including Red Robin (NASDAQ:RRGB), which recently posted impressive results, and even Applebee's (NASDAQ:APPB), I'd feel better waiting to see if Bob Evans can get its house cleaned up before placing an order.
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Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.
