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Noodles & Company (NASDAQ:NDLS) is a fast causal restaurant much like the beloved Chipotle Mexican Grill (NYSE:CMG), Panera Bread Company (NASDAQ:PNRA), and Potbelly Corp. (NASDAQ:PBPB). Noodles offers noodle and pasta dishes, sandwiches, soups and salads all for under $8 and served to order. Unlike Chipotle, Panera and Potbelly, Noodles & Company brings your food to you on real signature stoneware and is served tableside with stainless steel flatware. They even clean up for you after you leave, with no tip expected or accepted.

Current Valuation and Growth

Noodles & Company's current valuation seems high at first glance, but it's appropriate considering the future growth of the company. The company has a trailing P/E of 151 and a forward-looking P/E of 62.8, indicating the company will have a 145.45% increase in EPS (from $0.22 to $0.54) within the next 12-month period. This substantial EPS growth is the result of approximately 50 planned new locations in the coming year, which is a 14% increase in growth from the company's current 368 system-wide restaurants in 29 states and the District of Columbia. Having EPS growth of $0.32 for every 50 additional restaurants shows how much upside the stock price has, given the company's plan of having 2,500 locations (a 550% increase from its current locations of 368). Not to mention the increases in profitability associated with economies of scales as the number of locations increase.

Given that fact that the company only has 368 locations, a trailing P/E of 151 is not unreasonable considering Chipotle has a trailing P/E of 55 and has over 1,500 restaurants. Based off a forward-looking P/E of 41, Chipotle's EPS are expected to increase only 35.45% (from $9.86 to $13.06) as compared to the 145.45% increase expected by Noodles & Company. Noodles & Company follows a similar pattern of expansion to Chipotle, putting restaurants in a similar and usually the same locations of existing Chipotle locations. The company's valuation is also very attractive compared to Potbelly, which also had its IPO this year. Potbelly's trailing P/E is currently 953.

Proven Management

Noodles & Company's growth has been a result of its proven executives. The majority of Noodles' top executives left executive positions at successful restaurants to join Noodles & Company. Restaurants such as Chipotle, McDonald's (NYSE:MCD), PepsiCo Restaurants (NYSE:PEP), Potbelly, and Einstein/Noah Bagel Corp. (BGAL) to name a few. Leaving executive positions at these top-rated restaurants indicates Noodles top executives have faith in the future growth and success of the company even more so than their previous companies such as Chipotle. A few of the many Noodles executives that left great positions at outstanding companies are:

Kevin Reddy -- Chairman and CEO

Kevin Reddy became the CEO of Noodles & Company in April 2006 and chairman of the board in May 2008 providing the company with 25-plus years of restaurant experience. Prior to Noodles & Company, Reddy was the chief operating officer, chief operations officer, and restaurant support officer for Chipotle Mexican Grill. Reddy began his professional career with McDonald's in 1983 as a regional controller and progressed into positions of escalating responsibility.

Keith Kinsey -- President, Chief Operating Officer, and Director

Keith Kinsey has served as president since July 2012 and chief operating officer since November 2007. Kinsey also served as chief financial officer from July 2005 to July 2012. He became a member of the board of directors in November 2008. Prior to joining Noodles & Company, he was the Pacific regional director for Chipotle Mexican Grill. Prior to that time, he held various management roles at McDonald's, PepsiCo Restaurant Group, and Checkers Drive-In Restaurants.

Dave Boennighausen -- Chief Financial Officer

Dave Boennighausen has served as the company's chief financial officer since July 2012. Joining Noodles & Company in 2004, he had served as the VP of finance and the executive VP of finance.

These top executives have had an outstanding track record for successfully growing Noodles by establishing new locations and enhancing the company's image. The company had 142 locations in 2007. Under the management of Kevin Reddy, which began in 2005, the number of Noodles & Company locations grew threefold from the beginning of the financial crisis of 2007-08 to 2013, reaching 368 locations. The company has seen a 160% growth in restaurant locations in the last five years, which is described as one of the worst times the United States economy has seen since the Great Depression.

Attractive Buying Opportunity

Noodles stock has experienced a downward push lately after the company announced a slightly lower than expected Q3 revenue report. The company reported earnings per share of $0.11 (in line with expectations) and revenue of $88.9M (-2.3% below expectations of $91M). The company also announced that it would be offering 4.5M shares at $39.50, causing the stock price to fall even more. Noodles & Company currently sits at $33.90. Typically, firms issue shares during IPOs or secondary offerings that are underpriced compared to the price at which they could be marketed to ensure the shares are purchased on the open market. This means the Noodles & Company management and the underwriters of the offering chose to offer the shares at $39.50 because it is below the price at which the shares should trade on the open market.

Of the 11 analysts covering the stock, the company had a mean price target of $43.29. This indicates a potential upside of 27.7% from the price at which this article was written. These expectations are what the analysts believe the stock should sell for currently. Given the future prospective growth of the company, 27.7% is a very small portion of the future upside for the company's stock price. Getting in now could provide a substantial short-term gain and an even greater long-term gain for investors.

Conclusion

It is difficult to say whether Noodles & Company will be as successful as its superstar peer, Chipotle. That said, even if the company sees half the growth Chipotle has seen, it would result in tremendous returns for investors. The company has plenty of room for growth with only 368 locations in only 29 states. There are still 21 states waiting for Noodles & Company to come to their biggest cities. Not to mention the international expansion plans the company may have. The company's growth may seem ambitious, but with the proven track record of management it seems very feasible. It is also difficult to say what the stock price will do in the next quarter, but in the next one, three, and five years investors should see substantial returns. Much higher returns than if you were to invest in Chipotle, which already has five times the amount of locations.

Source: Noodles & Company: Proven Leadership, Track Record Of Growth, And Accelerating Expansion