NOODLES & Co (NASDAQ: NDLS)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0001275158
Market Cap 25.45 Mn
P/B -0.65
P/E -0.56
P/S 0.05
ROIC (Qtr) -14.64
Div Yield % 0.00
Rev 1y % (Qtr) -0.54
Total Debt (Qtr) 268.76 Mn
Debt/Equity (Qtr) -6.91

About

Noodles & Company, a Delaware corporation with the ticker symbol NDLS, operates in the fast-casual segment of the restaurant industry. The company was established in 2002 and has since expanded to operate 470 restaurants across 31 states, with a blend of company-owned and franchise locations. Noodles & Company prides itself on offering a globally-inspired menu, featuring a variety of noodle and pasta dishes, salads, soups, and appetizers. The company's business model revolves around providing a menu that draws inspiration from various international...

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Price action

Investment thesis

Bull case

  • Tangible assets of 272.99M provide robust 12.34x coverage of other current liabilities 22.13M, indicating strong asset backing.
  • Retained earnings of (220.22M) represent substantial 5.66x of equity (38.90M), indicating strong internal capital generation.
  • Cash reserves of 4.69M provide comfortable 14.44x coverage of tax obligations 325000, showing strong fiscal management.
  • Strong tangible asset base of 272.99M provides 36.01x coverage of intangibles 7.58M, indicating robust asset quality.
  • Tangible assets of 272.99M provide robust 3.86x coverage of current liabilities 70.65M, showing strong asset backing.

Bear case

  • Operating cash flow of (1.63M) barely covers its investment activities of (13.85M), with a coverage ratio of 0.12, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of (1.63M) shows concerning coverage of stock compensation expenses of 2.95M, with a -0.55 ratio indicating potential earnings quality issues.
  • Free cash flow of (15.47M) provides weak coverage of capital expenditures of 13.85M, with a -1.12 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (34.85M) show weak coverage of depreciation charges of 27.91M, with a -1.25 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of (1.63M) provides minimal -29.58x coverage of tax expenses of 55000, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 269.29 Bn 53.02 11.14 55.82 Bn
2 SBUX Starbucks Corp 113.46 Bn 82.87 3.01 25.47 Bn
3 CMG Chipotle Mexican Grill Inc 52.60 Bn 34.25 4.41 5.08 Bn
4 YUM Yum Brands Inc 45.81 Bn 28.68 6.47 11.55 Bn
5 DRI Darden Restaurants Inc 28.08 Bn 75.62 5.18 6.41 Bn
6 DPZ Dominos Pizza Inc 23.46 Bn 237.88 14.39 -
7 QSR Restaurant Brands International Inc. 23.10 Bn 25.05 2.49 15.64 Bn
8 YUMC Yum China Holdings, Inc. 21.65 Bn 23.95 1.87 1.84 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.07 2.29
EV to Cash from Ops. EV/CFO -184.59 24.12
EV to Debt EV to Debt 1.12 5.80
EV to EBIT EV/EBIT -8.62 -9.51
EV to EBITDA EV/EBITDA -43.31 18.40
EV to Free Cash Flow [EV/FCF] EV/FCF -19.41 21.49
EV to Market Cap EV to Market Cap 11.80 2.46
EV to Revenue EV/Rev 0.61 3.21
Price to Book Value [P/B] P/B -0.65 -1.58
Price to Earnings [P/E] P/E -0.56 27.33
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -9.76
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 22.01
Dividend per Basic Share Div per Share (Qtr) 0.00 0.94
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 33.46
Interest Coverage Int. cover (Qtr) -3.30 -92.74
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 65.63 -25.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 41.90 33.72
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 3.33
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -39.61 -120.58
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -254.29 -20.60
EBIT Growth (1y) % EBIT 1y % (Qtr) -39.56 11.80
EBT Growth (1y) % EBT 1y % (Qtr) -39.13 -45.23
EPS Growth (1y) % EPS 1y % (Qtr) -38.89 -136.44
FCF Growth (1y) % FCF 1y % (Qtr) 31.48 6,077.93
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -9.62 24.40
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.76 1.02
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.09
Cash Ratio Cash Ratio (Qtr) 0.07 0.80
Current Ratio Curr Ratio (Qtr) 0.34 1.56
Debt to Equity Ratio Debt/Equity (Qtr) -6.91 0.61
Interest Cover Ratio Int Coverage (Qtr) -3.30 -92.74
Times Interest Earned Times Interest Earned (Qtr) -3.30 -92.74
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -1.40 8.18
EBIT Margin % EBIT Margin % (Qtr) -7.05 -2.07
EBT Margin % EBT Margin % (Qtr) -9.19 -0.92
Gross Margin % Gross Margin % (Qtr) 22.90 34.54
Net Profit Margin % Net Margin % (Qtr) -9.20 -2.79