Noodles & Co. (NDLS) Stock Rises After Authorizing $35 Million Share Repurchase Program

NEW YORK (TheStreet) -- Noodles & Co. (NDLS) shares are up 5.37% to $15.70 in early market trading on Friday after the casual dining restaurant chain announced a $35 million share repurchase program.

The company amended its existing revolving line of credit to $75 million from $45 million and extended the maturity date to June 2020 from November 2018.

"We are pleased to announce the initiation of a share repurchase program which reflects our confidence in the long-term strength of the Noodles brand, as well as our continued commitment to optimizing shareholder returns," said CEO Kevin Reddy.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio sees the program as a step in the right direction but he would like to see more from management.

"I think it is great that they are buying back stock but what we really need is better execution in the game plan as we talked about the other day on Mad Money," said Cramer.

TheStreet Ratings team rates NOODLES & CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate NOODLES & CO (NDLS) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:

  • 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.
  • You can view the full analysis from the report here: NDLS Ratings Report

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