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Noodles & Company (NDLS) Q2 Earnings: What to Expect?
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Noodles & Company (NDLS - Free Report) is set to report second-quarter 2016 results on Aug 4, after the market closes. Last quarter, the company posted positive surprise of 14.29%. The company posted negative earnings surprises in two of the trailing four quarters and posted in-line result in one, which translates to a negative average surprise of 34.13%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Higher costs and expenses as well as contracting margins have had a negative impact on Noodles & Company’s profits over the past few quarters. In fact, costs of goods sold of this fast casual restaurant are likely to be high in the second quarter owing to increased operating and labor costs as well as expenses related to the implementation of strategic initiatives, thereby hurting margins.
Nonetheless, Noodles & Company is taking all the necessary steps to boost growth. Menu innovations like adding Korean Barbecue Meatballs shareable featuring Gochujang sauce as well as inclusion of a popular dish like Pad Thai is expected to boost the top line in the upcoming quarter. Also, its catering program has received an overwhelming response. Like some other restaurant chains, Noodles & Company is capitalizing on digital technology, as evidenced by the rapid growth in online orders. We believe that these initiatives would improve traffic, thereby aiding comps.
Our proven model does not conclusively show that Noodles & Company is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Noodles & Company’s Earnings ESP is -100.00%. This is because the Most Accurate estimate is at a loss of 2 cents, while the Zacks Consensus Estimate stands at a loss of 1 cents.
Zacks Rank: Noodles & Company has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant stocks that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +1.15% and a Zacks Rank #2.
Dave & Buster’s Entertainment, Inc. (PLAY - Free Report) with an Earnings ESP of +2.27% and a Zacks Rank #1.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Noodles & Company (NDLS) Q2 Earnings: What to Expect?
Noodles & Company (NDLS - Free Report) is set to report second-quarter 2016 results on Aug 4, after the market closes. Last quarter, the company posted positive surprise of 14.29%. The company posted negative earnings surprises in two of the trailing four quarters and posted in-line result in one, which translates to a negative average surprise of 34.13%.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Higher costs and expenses as well as contracting margins have had a negative impact on Noodles & Company’s profits over the past few quarters. In fact, costs of goods sold of this fast casual restaurant are likely to be high in the second quarter owing to increased operating and labor costs as well as expenses related to the implementation of strategic initiatives, thereby hurting margins.
Nonetheless, Noodles & Company is taking all the necessary steps to boost growth. Menu innovations like adding Korean Barbecue Meatballs shareable featuring Gochujang sauce as well as inclusion of a popular dish like Pad Thai is expected to boost the top line in the upcoming quarter. Also, its catering program has received an overwhelming response. Like some other restaurant chains, Noodles & Company is capitalizing on digital technology, as evidenced by the rapid growth in online orders. We believe that these initiatives would improve traffic, thereby aiding comps.
NOODLES & CO Price and EPS Surprise
NOODLES & CO Price and EPS Surprise | NOODLES & CO Quote
Earnings Whispers
Our proven model does not conclusively show that Noodles & Company is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Noodles & Company’s Earnings ESP is -100.00%. This is because the Most Accurate estimate is at a loss of 2 cents, while the Zacks Consensus Estimate stands at a loss of 1 cents.
Zacks Rank: Noodles & Company has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant stocks that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +1.15% and a Zacks Rank #2.
Dave & Buster’s Entertainment, Inc. (PLAY - Free Report) with an Earnings ESP of +2.27% and a Zacks Rank #1.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>