Technical Turnaround for Bob Evans Farms

05/16/2017 2:50 am EST

Focus: STOCKS

Ned Piplovic

Assistant Editor, Eagle Financial Publications

Bob Evans Farms (BOBE) announced in early May 2017 that it has completed the sale of its restaurant business to private-equity firm Golden Gate Capital for $565 million, explains Ned Piplovic, contributing editor to DividendInvestor.com.

It continues to operate BEF Foods, which produces and distributes smoked and fully cooked and smoked meat products, ready-to-eat products, home-style refrigerated side dishes and frozen food items.

As part of a plan to focus on food manufacturing, the company acquired the Pineland Farms Potato Company to expand and complement its assortment of ready-to-serve food products.

Because of those recent transaction, Bob Evans Farms will pay a special dividend of $7.50 per share in the middle of June to all shareholders of record on May 30.

This special dividend will be paid in addition to the company’s regular quarterly dividend of 34 cents a share, which is equivalent to a $1.36 annual payout and a 2% yield.

The annual dividend grew at an average rate of 9.1% over the past 11 consecutive years and at an average rate of more than 7% for the past 20 years.

The share price dropped 22% between May and mid-July 2016. However, since the July low, the share price rose more than 90% and has reached its 52-week high on May 1, 2017.

Since crossing above the 200-day MA in a bullish manner in December 2016, the 50-day MA has increased to 27% above the 200-day MA and is still rising.

The moving average and the potential of cost cuts from consolidation indicate that BOBE’s share price could be well positioned to continue its current growth trend a little longer.

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