Noodles & Company: High-Risk, High-Reward

Oct. 09, 2022 2:05 AM ETNoodles & Company (NDLS)3 Comments
Taylor Dart profile picture
Taylor Dart


  • Noodles & Company released its Q2 results in late July, reporting 5.1% comp sales growth, but this figure was helped by menu pricing as traffic slowed in the period.
  • From a revenue standpoint, sales were up 4% year-over-year partially impacted by refranchising of 15 restaurants, but earnings per share fell off a cliff, declining 62%.
  • While the impact of inflation on margins is certainly negative and has contributed to a rough year, its future looks brighter as the company returns to unit growth.
  • With Noodles currently trading at ~10x FY2023 earnings estimates, I see significant negativity already priced into the stock, and I would view pullbacks below $4.15 as buying opportunities.
Pasta. Various kinds of uncooked pasta and noodles over stone background, top view with copy space for text. Italian food culinary concept. Collection of different raw pasta on cooking table

YelenaYemchuk/iStock via Getty Images

Just over nine months ago, I wrote on Noodles & Company (NASDAQ:NDLS), noting that pullbacks below $7.20 would present a buying opportunity. This turned out to be a terrible call with the shift to negative traffic for the industry, exacerbated by

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Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Disclosure: I/we have a beneficial long position in the shares of SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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