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Noodles & Company (NDLS) Misses Q3 Earnings & Revenues

Noodles & CompanyNDLS develops and operates fast casual restaurants in the United States. The company is based in Broomfield, Colorado.

Noodles & Company's comps have been sluggish over the past few quarters, mainly due to negative comps recorded in Colorado, Washington D.C. and Austin.

However, Noodles & Company is taking all the necessary steps to boost growth. Menu innovation, like testing the kids' meal, is an important part of its strategy, complemented by limited time offers. Also, its catering program has received an overwhelming response. Like some other restaurant chains, Noodles & Company is also capitalizing on digital technology. Online ordering continues to grow at a rapid pace. The company is also looking to cash in on the low carbohydrate craze in the U.S. by launching healthy menu items and continues to test naturally-raised, antibiotic-free chicken at its restaurants.

Investors should note the recent earnings estimate revisions for NDLS, as the consensus estimate has been almost stable. NDLS recent history in earnings season has also been poor. Noodles & Company has delivered negative earnings surprise in three of the four quarters, making for an average positive surprise of 15.95%. Further, the company has posted negative revenue surprises in three of the trailing four quarters.

Currently, NDLS has a Zacks Rank #4 (Sell), but that could change following Noodles & Company's earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings : NDLS missed on earnings. Our consensus earnings estimate called for earnings of 7 cents per share, and the company reported breakeven EPS. Investors should note that these figures take out stock option expenses.

Revenues : NDLS reported revenues of $117.3 million. This missed our consensus estimate of $120 million.

Key Stats to Note : Comps decreased 0.9% system-side, mainly due to a reduction of 0.7% for company-owned restaurants and a decline of 1.9% for franchise restaurants. Restaurant contribution margin decreased 320 basis points to 15.2%. Adjusted EBITDA decreased 28.1% year over year to $8.7 million.

The company currently expects adjusted earnings per share to be in the range of 13 to 15 cents for 2015. Revenues are expected to be approximately $455 million for 2015. Comps growth is expected to be in the range of flat to slightly negative.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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