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Market Outperform - Price 28.06 on July 1
by Avondale Partners

We've [recently] spoken with 30 Bob Evans [restaurants], and were surprised to learn that overall, the...majority of comments related to year-over-year trends within the units were positive. In Bob Evans channel checks, 63% of the units we spoke with had increases in traffic...consistent with the restaurant's May [same-store-sales], up 4.4%. Of the 15 Mimi's Cafes we spoke with, comments were more lukewarm than at Bob Evans, but given Mimi's recent SSS track record, we could view lukewarm as an improvement. The concept's May SSS were down (5%). [Yet]... 47% indicated a traffic increase...Trading at 13 times our FY09 estimate of $2.15 and 11.2 times our new FY10 estimate of $2.50, while growing earnings and improving margins despite the current operating environment....BOBE shares [look like] a unique buying opportunity in the restaurant space. Market cap: $875 million.

Najarian said Bob Evans (BOBE) and Buffalo Wild Wings (BWLD) are not hedging as effectively. Shorting those last two is a better trade than getting long effective hedgers, he said.

19.9

7 out of 9. Average return of 4.27%, the two unsuccessful trades were the trades beginning on July 14, 2006 (-8%) and 9/18/01 (-0.05%). The most successful trade was the one beginning January 23, 2006 when BOBE was up 23% one month later.

Downgraded by KeyBanc Capital Mkts/McDonald from Buy to Hold