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What Awaits Noodles & Company (NDLS) Stock in Q1 Earnings?

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Noodles & Company (NDLS - Free Report) is scheduled to report first-quarter 2017 numbers on May 9, after market close.

Last quarter, the company posted a 42.86% positive earnings surprise. However, the trailing four-quarter average negative surprise is 6.55%.

Let’s see how things are shaping up for this announcement.

Noodles & Company Price and EPS Surprise

 

Noodles & Company Price and EPS Surprise | Noodles & Company Quote

Factors Likely to Influence Q1 Results
   
Various sales building initiatives undertaken by the company such as streaming of menu and its innovation, introduction of new cooking procedures, effective marketing strategy, increased focus on the off-premise business along with investments in technology-driven initiatives like digital ordering should boost the quarter’s results. Moreover, efforts to simplify operations is likely to improve execution and result in increased guest satisfaction and labor productivity.

However, continual underperformance of a small segment of its total restaurant base has been leading to earnings and margins declines over the past few quarters. Though the company has been closing some of the underperforming units, still the remaining ones are anticipated to hamper Q1 results as well. Additionally, this fast casual restaurateur’s first-quarter margins are further expected to be pressurized due to higher costs as well as expenses related to the implementation of strategic initiatives.

Also, a soft consumer spending environment in the U.S. restaurant space might continue to hurt traffic and thereby comps in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show earnings beat for Noodles & Company 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Noodles & Company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Noodles & Company has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Notably, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #2.

The Priceline Group Inc. has an Earnings ESP of +2.16% and a Zacks Rank #3.

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