Noodles & Company (NASDAQ:NDLS), a popular fast-casual restaurant chain, will report Q1 earnings in a few weeks. The company has failed to beat EPS estimates six out of the last seven quarters but I think we will see this change over the next 1-9 months. I also believe we are one or two quarters away from a massive short squeeze again.
Noodles & Co (NDLS) missed Wall St. expectations last quarter but I can argue that as the stock rallied from $17.15-$28, the estimates jumped as well making it harder to beat earnings. When Noodles missed by a small amount on both the top and bottom line, investors sold the stock hard. Now that Wall St. is bearish and earnings estimates are low, Noodles & Company should have no problem beating or matching. With the company expected to report earnings in a few weeks, here are the numbers to watch.
Noodles & Co (NDLS) missed Wall St. expectations last quarter but I can argue that as the stock rallied from $17.15-$28, the estimates jumped as well making it harder to beat earnings. When Noodles missed by a small amount on both the top and bottom line, investors sold the stock hard. Now that Wall St. is bearish and earnings estimates are low, Noodles & Company should have no problem beating or matching. With the company expected to report earnings in a few weeks, here are the numbers to watch.
- Q1 EPS - $0.05
- Q1 Sales - $108.75 million
- Same Store Sales - 1.5%
- 2015 Sales Guidance - $475 million
The company expects to ramp up marketing later in the year which should bump up same store sales into the 2.5%-4% range. Noodles & Company (NDLS) is already making some key moves in Q2. The company opened their first Arizona location in Tempe on April 14th and they added buff bowls to the menu on April 1st. Buff Bowls are designed for less carbs, high protein. Based on the reaction on social media websites, customers are loving the diversification.
Now let's talk about NDLS the stock. Shares have formed a double bottom on the long term chart in the low $17's and the technicals are all coming together right now. The stock is trading above it's 10 day moving average with the 50 day moving average just $0.56 away as of April 17th. Now that expectations are rock bottom and the stock is low, if Noodles & Company (NDLS) can beat earnings, shares have significant upside to the $22-$25 range. If they would raise guidance in addition to a beat, I think the stock will likely hit $25-$28 over the next three months. If they report a miss, I don't see much more downside but we could easily see $16.
In conclustion, investors have never been this bearish on Noodles & Company (NDLS) and the stock price has rallied $2 off the record low set two weeks ago. If Noodles & Company delivers an upside surprise, expect a massive short squeeze.
