Bob Evans Down On Disappointing Outlook, Activist Holder's Criticism

Although Bob Evans Farms (NASDAQ: BOBE) beat fiscal fourth-quarter profit expectations by a significant margin, its shares nonetheless plunged Wednesday on disappointing guidance.

Also feeding the bears was activist shareholder Sandell Asset Management, which Wednesday issued the latest in a string of vehemently critical press releases, this latest again promising a proxy fight to replace much of Bob Evans' board.

Sandell has sought a spinoff of the company's supermarket foods unit and its real estate holdings.

But the really bad news came with guidance well below consensus views. Bob Evans forecast fiscal first-quarter earnings of $0.06 to $0.12, compared with Street expectations of $0.54.

Same-store sales are expected to decline 2.5 percent to three percent in the quarter, rising to low single-digit gains for the year.

Miller Tabak analyst Stephen Anderson said "more investors may be willing to side with Sandell" in light of disappointing guidance.

"The burden of proof will be on management to reverse the trend" of negative same-store sales comparisons "in short order," Anderson said in a research note.

Anderson maintains a Buy rating on Bob Evans and a $59 target.

Evans' adjusted earnings after the bell Tuesday of $0.48 per share beat the Street view by $0.07, although its revenue of $326.37 fell by 2.26 percent from a year earlier and slightly missed expectations.

Bob Evan's was down 4.5 percent Wednesday at $47.50 per share.