Smashed Noodles

Steve Kanaval |

Noodles.jpgPublicly Traded Restaurants are always tricky.

Noodles & Co (NDLS) opened for trading via IPO in June of 2013 at $32 per share and had a small pop to $50 in October of that year. Since then, it has been on a  year long slide, hitting a low of $17.15. The restaurant stock recently had a decent couple of quarters, and bounced back to $27.75 yesterday in front of earnings numbers, but took a dive today after missing (the lower end) of expectations, trading back down near it's September 2014 lows in the $19 range last I looked.

Get to Know your Noodles

Noodles & Company develops and operates fast casual restaurants in the United States. The company's restaurants offer various cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches, and appetizers. As of July 1, 2014, it operated 410 locations in 31 states and the District of Columbia. The company was founded in 1995 and is based in Broomfield, Colorado.

Noodles & Company earned $0.13 in the quarter, a penny short of what analysts expected. Revenue of $108.5 million also fell short of the $110.07 million analysts expected.

Looking forward to 2015, the company projected an earnings per share growth of around 20%, well short of the 34% growth analysts projected.

Setyan noted that the company's 2015 earnings per share guidance was cut to 20% from a prior guidance of 20 to 25%, but continues to be predicted on a 2.5 to 40% same-store sales growth, 19 to 19.5% unit-level margins and 12 to 14% unit growth. The analyst added that the comp guidance relies on a 1 to 1.5% lift from catering, a 2% contribution from pricing and a "meaningful acceleration" in second half 2015 trends, despite tougher comparisons.

"We remain cautious such sales levels can be achieved and sustained, as any meaningful acceleration has heretofore remained elusive," Setyan argued. The analyst lowered his 2015 earnings per share estimate to $0.46 from a previous $0.49, reflecting the company's commentary. At the same time, a 2016 earnings per share estimate of $0.55 was introduced.

Noodles & Company has a tough road ahead, and any retest of the lows may spook  large holders, as and many insiders continue to look for ways to cash shares. The restaurant business is tough as it is, but being a public company brings much analysis from market watchers.That's certainly the case here, and at the moment, expectations seem more than a bit unrealistic.

 

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Companies

Symbol Name Price Change % Volume
NDLS Noodles & Company 4.40 0.15 3.53 31,045

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