Noodles (NDLS) Is Strong On High Volume Today

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.

Trade-Ideas LLC identified Noodles ( NDLS) as a strong on high relative volume 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 $3.7 million.
  • NDLS has traded 68,830 shares today.
  • NDLS is trading at 2.17 times the normal volume for the stock at this time of day.
  • NDLS is trading at a new high 5.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on NDLS:

Noodles & Company develops and operates fast casual restaurants in the United States. It offers cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches, and appetizers. NDLS has a PE ratio of 42. Currently there are 3 analysts that rate Noodles a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Noodles has been 469,000 shares per day over the past 30 days. Noodles has a market cap of $444.2 million and is part of the services sector and leisure industry. Shares are down 43.8% year-to-date as of the close of trading on Thursday.

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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 generally disappointing historical performance in the stock itself, unimpressive growth in net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.54%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 280.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NDLS is still more expensive than most of the other companies in its industry.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 293.3% when compared to the same quarter one year ago, falling from $1.42 million to -$2.75 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • The gross profit margin for NOODLES & CO is rather low; currently it is at 17.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.60% is significantly below that of the industry average.
  • NDLS's debt-to-equity ratio is very low at 0.16 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 0.23 is very weak and demonstrates a lack of ability to pay short-term obligations.

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