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Factors Setting the Tone for Noodles & Co. (NDLS) Q2 Earnings

Zacks Equity Research

Noodles & Company NDLS is likely to deliver bottom-line growth, when it reports second-quarter 2019 numbers. However, the company reported earnings miss in two of the trailing four quarters.

Which Way Are Q2 Estimates Headed?

The Zacks Consensus Estimate for second-quarter earnings is pegged at 5 cents, which remained flat over the past 60 days. In the prior-year quarter, the company had reported earnings of 1 cent. Revenues are expected to come in at $117.3 million, down 0.1% year over year.

Factors at Play

Noodles & Company’s second-quarter 2019 results are likely to gain from sales-building efforts like streamlining of menu and innovation, effective marketing strategy and increased focus on the off-premise business. Technology-driven initiatives like digital ordering are also expected to drive the company’s quarterly performance.

Furthermore, the company is anticipated to witness solid traffic growth in the to-be-reported quarter. On the first-quarter 2019 conference call, Noodles & Company said that traffic grew during the last few weeks of March.

However, high costs from restaurant operation and increased labor expenses might have affected Noodles & Company’s earnings in the quarter to be reported. Meanwhile, the company has been undertaking the task of closing underperforming restaurants, which will lead to margin expansion.

What Does the Zacks Model Unveil?

Our proven model does not show that Noodles & Company is likely to beat earnings estimates in second-quarter 2019. 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. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Noodles & Company has an Earnings ESP of 0.00% and a Zacks Rank #2.  

Noodles & Company Price and EPS Surprise

Noodles & Company Price and EPS Surprise

Noodles & Company price-eps-surprise | Noodles & Company Quote

Other Stocks to Consider

Here are some companies in the Retail- Restaurant space, which per our model have the right combination of elements to post earnings beat in the respective quarters.

Chipotle Mexican Grill, Inc. CMG has an Earnings ESP of +7.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Starbucks Corporation SBUX has an Earnings ESP of +0.32% and a Zacks Rank #2.

McDonald's Corporation MCD has an Earnings ESP of +0.88% and a Zacks Rank #3.

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