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Bear of the Day: Noodles and Co (NDLS)

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It’s easy to be bearish when it feels like the sky is falling. When you dig deep into the numbers, the market’s downside reaction after the CPI print has been bad, but not terrible across the board. Even on Thursday, as the broad market retreated, there were several industries which profited. Travel, biotech and others had their day in the sun while the tech-heavy NASDAQ Composite came under pressure.

Buying the dip has proven to be intelligent again and again in the grand scheme of things. You don’t have to try to perfectly time the bottom to win in the long run. Rather, it’s patience that plays a major role in long-term investing success.

One way to not get caught up in the day-to-day rumblings of the market is by investing in stocks with strong earnings trends to the upside, and avoiding those where analysts are cutting their growth numbers. Today’s Bear of the Day is a stock that has seen numbers cut across the board.

I’m talking about Zacks Rank #5 (Strong Sell) Noodles & Company (NDLS - Free Report) . Noodles & Company, a restaurant concept company, develops and operates fast-casual restaurants. It offers cooked-to-order dishes, including noodles and pasta, soups, salads, and appetizers. As of December 28, 2021, the company operated 448 restaurants in 29 states, which included 372 company locations and 76 franchise locations.

Zacks Investment Research
Image Source: Zacks Investment Research

The reason for the unfavorable Zacks Rank is the series of negative earnings estimates coming from analysts. Over the last sixty days, three analysts have cut estimates for the current year, while two have done so for next year’s numbers. The bearish moves have sliced our Zacks Consensus Estimates for the current year from 17 cents to 3 cents while next year’s number is off from 59 cents to 51 cents.

The Retail – Restaurants industry is in the Bottom 29% of our Zacks Industry Rank. There are, however, a few stocks within this industry which are still in the good graces of our Zacks Rank. Those stocks include Zacks Rank #2 (Buy) stocks Cracker Barrel (CBRL - Free Report) and First Watch Restaurant Group (FWRG - Free Report) .

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