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Will Noodles & Company (NDLS) Disappoint in Q3 Earnings?

Noodles & CompanyNDLS is scheduled to report third-quarter 2016 numbers on Nov 3, after market close.

Last quarter, Noodles & Company posted a 50.00% negative earnings surprise. Moreover, the trailing four-quarter average earnings surprise stands at a negative 45.24%.

Let's see how things are shaping up for this announcement.

NOODLES & CO Price and EPS Surprise

NOODLES & CO Price and EPS Surprise | NOODLES & CO Quote

Factors Likely to Influence this Quarter

Higher costs and expenses as well as contracting margins had a negative impact on Noodles & Company's profits over the past few quarters. In fact, this fast casual restaurateur's third-quarter margins are also likely to be under pressure owing to increased operating and labor costs as well as expenses related to the implementation of strategic initiatives.

Moreover, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.

Nonetheless, various sales building initiatives undertaken by the company such as menu innovation, effective marketing strategy, increased focus on the catering program along with investments in technology-driven initiatives like digital ordering should somewhat boost the quarter's results.

Earnings Whispers

Our proven model does not conclusively show that Noodles & Company is likely to beat the Zacks Consensus Estimate this quarter. 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP : Noodles & Company has an Earnings ESP of -33.33%. This is because the Most Accurate estimate stands at a loss of 4 cents per share while the Zacks Consensus Estimate is pegged at a loss of 3 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank : Noodles & Company has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some restaurant companies to consider instead as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Wendy's Company WEN has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Fogo de Chao, Inc. FOGO has an Earnings ESP of +13.33% and a Zacks Rank #3.

Dave & Buster's Entertainment, Inc. PLAY has an Earnings ESP of +7.69% and a Zacks Rank #3.

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WENDYS CO/THE (WEN): Free Stock Analysis Report

DAVE&BUSTRS ENT (PLAY): Free Stock Analysis Report

FOGO DE CHAO (FOGO): Free Stock Analysis Report

NOODLES & CO (NDLS): Free Stock Analysis Report

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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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