Bob Evans shares rise on better-than-expected Q4 profit

(Reuters) - Shares of Bob Evans Farms Inc (BOBE.O) rose as much as 19 percent on Wednesday, a day after the restaurant chain operator posted a strong fourth-quarter profit, helped cost management in the restaurant segment and strong performance in the food products business.

"We think there are an increasing number of value-conscious customers moving from bar-and-grill restaurants to Bob Evans," analyst Stephen Anderson of MKM Partners said.

Anderson, who upgraded the company to "buy" from "neutral", said average menu prices at Bob Evans are about 15 percent lower than competitors like Applebee's, owned by DineEquity (DIN.N), Chili's, owned by Brinker (EAT.N), and Ruby Tuesday

(RT.N).

"While many restaurant companies in the casual dining industry have experienced contracting margins in recent months due to the volatile commodity and labor cost environment, Bob Evans Farms appears to have bucked the trend in the fourth quarter," analyst Lynne Collier from KeyBanc Capital said.

But Collier, who rates the stock "hold," said the company's fiscal 2009 profit outlook of $2.00 to $2.10 assumes negative traffic and higher commodity costs.

The company reported fourth-quarter net income of $16.1 million, or 52 cents a share, on revenue of $436.4 million.

Analysts on average had expected a profit of 40 cents a share, before special items, on revenue of $440.8 million, according to Reuters Estimates.

Shares of the company rose to $34.70, before paring some gains to trade up $5.44 at $34.52 Wednesday afternoon on Nasdaq.

(Reporting by Eric Yep in Bangalore; Editing by Amitha Rajan)