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Noodles & Company (NDLS - Free Report) is still navigating a difficult environment of the coronavirus and inflationary pressures. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall double digits in 2022.
Noodles & Company operates 450 restaurants in the United States, serving noodle and pasta dishes from Wisconsin Mac & Cheese to good-for-you Zoodles.
A Miss in the Second Quarter
On July 27, Noodles & Company reported its second quarter results and missed on the Zacks Consensus by $0.02. Earnings were $0.05 versus the Zacks Consensus of $0.07.
The system-wide comparable restaurant sales rose 5.1%, comprised of a 5.1% increase at company-owned restaurants and a 5.3% increase at franchise restaurants.
Comparable restaurant sales were boosted by continued momentum in the in-person channels as consumers want to be out of the house, in addition to price increases in the core menu.
Digital sales, however, accounted for 51.7% of total revenue. And company average units volumes were up 5.3% to $1.42 million over the second quarter of last year and were 18.3% higher compared to the pre-covid second quarter of 2019.
In a positive going forward, key commodity prices, especially on chicken, have come down from record highs.
Noodles & Company also launched its new Leanguini product, which offers 56% less net carbs and 44% more protein than traditional wheat pasta. It is also offering value in this inflationary environment to customers with new $7 menu options.
Additionally, it still expects to open another 21 to 23 new restaurants in 2022 despite the challenging environment.
Outlook for the Third Quarter
The company sees third quarter comps in the positive, but in the low-single digits.
The analysts didn't like guidance as they've been cutting full year estimates.
3 estimates were cut in the last week for 2022 pushing down the Zacks Consensus to $0.03 from $0.13. That's an earnings decline of 82.4% because Noodles & Company made $0.17 last year.
2 estimates were also lower for 2023, but analysts are more bullish on next year, as some of the growth initiatives kick in and inflation moderates. The 2023 Zacks Consensus Estimate is looking for $0.51, a gain of 1,599% from 2022.
Shares Fall in 2022
Shares of Noodles & Company have taken it on the chin in 2022, falling 43.2%.
Image Source: Zacks Investment Research
But they still aren't cheap. It trades with a forward P/E of 154. It doesn't pay a dividend for your patience, either.
For investors interested in restaurant stocks, you might want to stay on the sidelines until inflationary pressures ease further.
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Bear of the Day: Noodles & Co. (NDLS)
Noodles & Company (NDLS - Free Report) is still navigating a difficult environment of the coronavirus and inflationary pressures. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall double digits in 2022.
Noodles & Company operates 450 restaurants in the United States, serving noodle and pasta dishes from Wisconsin Mac & Cheese to good-for-you Zoodles.
A Miss in the Second Quarter
On July 27, Noodles & Company reported its second quarter results and missed on the Zacks Consensus by $0.02. Earnings were $0.05 versus the Zacks Consensus of $0.07.
The system-wide comparable restaurant sales rose 5.1%, comprised of a 5.1% increase at company-owned restaurants and a 5.3% increase at franchise restaurants.
Comparable restaurant sales were boosted by continued momentum in the in-person channels as consumers want to be out of the house, in addition to price increases in the core menu.
Digital sales, however, accounted for 51.7% of total revenue. And company average units volumes were up 5.3% to $1.42 million over the second quarter of last year and were 18.3% higher compared to the pre-covid second quarter of 2019.
In a positive going forward, key commodity prices, especially on chicken, have come down from record highs.
Noodles & Company also launched its new Leanguini product, which offers 56% less net carbs and 44% more protein than traditional wheat pasta. It is also offering value in this inflationary environment to customers with new $7 menu options.
Additionally, it still expects to open another 21 to 23 new restaurants in 2022 despite the challenging environment.
Outlook for the Third Quarter
The company sees third quarter comps in the positive, but in the low-single digits.
The analysts didn't like guidance as they've been cutting full year estimates.
3 estimates were cut in the last week for 2022 pushing down the Zacks Consensus to $0.03 from $0.13. That's an earnings decline of 82.4% because Noodles & Company made $0.17 last year.
2 estimates were also lower for 2023, but analysts are more bullish on next year, as some of the growth initiatives kick in and inflation moderates. The 2023 Zacks Consensus Estimate is looking for $0.51, a gain of 1,599% from 2022.
Shares Fall in 2022
Shares of Noodles & Company have taken it on the chin in 2022, falling 43.2%.
Image Source: Zacks Investment Research
But they still aren't cheap. It trades with a forward P/E of 154. It doesn't pay a dividend for your patience, either.
For investors interested in restaurant stocks, you might want to stay on the sidelines until inflationary pressures ease further.