Noodles (NDLS) Is Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Noodles ( NDLS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Noodles as such a stock due to the following factors:

  • NDLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.5 million.
  • NDLS has traded 161,753 shares today.
  • NDLS is down 7.4% today.
  • NDLS was up 12.9% yesterday.

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More details on NDLS:

Noodles & Company develops and operates fast casual restaurants in the United States. The company's restaurants offer various cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches, and appetizers. NDLS has a PE ratio of 61.7. Currently there are 4 analysts that rate Noodles a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Noodles has been 639,500 shares per day over the past 30 days. Noodles has a market cap of $627.3 million and is part of the services sector and leisure industry. Shares are down 36.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Noodles as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for NOODLES & CO is rather low; currently it is at 21.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.54% significantly trails the industry average.
  • This stock's share value has moved by only 49.00% over the past year. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • NDLS's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.20 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, NOODLES & CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has improved to $8.85 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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