The Bob Evans Farms Miss 'Just Doesn't Make Sense,' Says Oppenheimer

In a report published Tuesday evening, Oppenheimer analyst Brian Bittner commented that he is "perplexed" following

third quarter results. According to Bittner, the company's earnings per share miss was attributed to the Restaurant segment, despite a "strong" four percent same-store sales gain. The analyst added that there was a "huge" $0.40 earnings per share variance versus consensus hidden in restaurant-level COGS/labor expenses and the miss unfolded despite a beat in BEF profits. Bittner expended that food and labor expenses were "shockingly high." Management expects fourth quarter same-store sales in the low-single-digits despite 230 basis points easier comparisons and improving trends. The analyst added that this is "also confusing" and further clarity is required. "Our earnings upside thesis proved incorrect in near term, but for reasons that still have us scratching our head," Bittner wrote. "One silver lining is board's announcement of $35 million of G&A cuts, which could add over $1/share of EPS." Bittner also stated that Bob Evans Farms initiatives to monetize its real estate has "more urgency" with

advisers hired to evaluate an REIT, sale-leaseback or other transaction now that a BEF Foods spin/separation is off the table. Shares remain Outperform rated with a price target lowered to $57 from a previous $62 and that the stock "is in the penalty box" until execution issues are solved.