Back to top

Image: Bigstock

Noodles & Company Comps Improve Despite Pandemic, Stock Up

Read MoreHide Full Article

Noodles & Company (NDLS - Free Report) recently provided an update on financial performance amid the COVID-19 pandemic. Following the announcement, the company’s shares gained 3.7% during after-hours trading on Jun 17.

Comparable Sales

In the month of April, comparable sales at company-owned, franchise and system wide restaurants were down 47%, 55.5% and 48.2%, respectively. However, in the month of May, the metric declined 28.9%, 37.3% and 30.1%, respectively.

For the week ended Jun 16, 2020, comparable sales at company-owned, franchise and system wide restaurants declined 14.8%, 16.8% and 15.1%, respectively. Although comparable sales have improved significantly over the past couple of weeks, average weekly sales (for the fiscal week) declined 9.7% during the week ended Jun 16, 2020 versus the comparable week of 2019.

Fiscal quarter to date (ended Jun 30, 2020), comparable sales at company-owned, franchise and system wide restaurants are expected to fall 33.2%, 39.8% and 34.1%, respectively. 

Menu Addition

Coming to menu innovation, the company added Perfect Bowls to its menu. Apart from serving classic noodle, Zoodle and Caulifloodle dishes, this healthier alternative caters to diets and lifestyles (including paleo-friendly, keto, vegetarian and gluten-sensitive) to match individual nutritional goals.

Other Updates

Although the company’s dining rooms were closed due to the pandemic, majority of the sales were derived from its off-premise services. Notably, digital sales for the week ended Jun 16, 2020 accounted for 67% of overall sales compared with 31% during the first quarter of 2020.

As of Jun 16, Noodles & Company reopened approximately 20% of its system-wide dining rooms, out of which 7% were company locations and 87% were franchised locations. Going forward, the company intends to reopen the remaining dining rooms as and when appropriate. 

Although the virus has triggered a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. As of Jun 17, the company has $62.4 million in cash. It has also disclosed credit facility amendments through third-quarter 2021, further enhancing its financial flexibility. In the past six months, shares of the company have declined 7.5% compared with the industry’s fall of 6.6%. 

Zacks Rank & Key Picks

Noodles & Company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks from the same space include Wingstop Inc. (WING - Free Report) , Restaurant Brands International Inc. (QSR - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) . Wingstop sports a Zacks Rank #1, while Restaurant Brands and Domino’s carry Zacks Rank #2 (Buy).

Wingstop has a three-five year earnings per share growth rate of 11%.

Earnings in 2021 for Restaurant Brands are expected to surge 36.1%.

Domino's has a trailing four-quarter positive earnings surprise of 12.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.

Zacks’ Single Best Pick to Double 

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>

Published in