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Noodles & Co. (NDLS) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Noodles & Co. (NDLS) closed at $7.73, marking a +0.91% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.26%. Elsewhere, the Dow lost 0.09%, while the tech-heavy Nasdaq lost 0.24%.

Heading into today, shares of the restaurant chain had lost 4.73% over the past month, lagging the Retail-Wholesale sector's gain of 3.04% and the S&P 500's gain of 2.87% in that time.

NDLS will be looking to display strength as it nears its next earnings release, which is expected to be August 6, 2019. The company is expected to report EPS of $0.05, up 400% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $117.25 million, down 0.13% from the year-ago period.

NDLS's full-year Zacks Consensus Estimates are calling for earnings of $0.16 per share and revenue of $468.17 million. These results would represent year-over-year changes of +700% and +2.26%, respectively.

Investors should also note any recent changes to analyst estimates for NDLS. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NDLS is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note NDLS's current valuation metrics, including its Forward P/E ratio of 46.9. For comparison, its industry has an average Forward P/E of 25.24, which means NDLS is trading at a premium to the group.

Meanwhile, NDLS's PEG ratio is currently 5.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 2.23 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 79, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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