On Wednesday, Benchmark, a financial analyst firm, adjusted its price target for Noodles & Co. (NASDAQ: NDLS), a fast-casual restaurant chain, to $3.00 from the previous $4.00. Despite this reduction, the firm has maintained its Buy rating on the company's stock.
The adjustment comes as Benchmark recalibrates its expectations for Noodles & Co.'s first-quarter same-store sales (SSS) for 2024. Additionally, the firm has revised its adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and historical Adjusted EPS (Earnings Per Share) calculations. This update aligns with a new calculation methodology recently adopted by the management of Noodles & Co. to better conform with the standards used by industry peers.
The analyst stated, "With this note, we are taking the opportunity to both preview our thoughts on 1Q24 SSS for NDLS, as well as to modify our adjusted EBITDA and historical Adjusted EPS calculations to reflect the new calculation methodology that management adopted to better conform with industry peers."
The revised price target of $3 represents the analyst's current valuation of Noodles & Co. based on the adjusted financial outlook. Despite the lowered expectations in terms of adjusted EBITDA, the firm's Buy rating indicates a belief in the potential for the stock to perform well in the market.
InvestingPro Insights
With Noodles & Co. (NASDAQ: NDLS) undergoing a price target adjustment by Benchmark, it's essential to look at the company's current financial health and market performance. According to InvestingPro data, Noodles & Co. has a market capitalization of $63.43 million and is facing challenges with a negative P/E ratio of -6.51, reflecting investor concerns about profitability. The company's revenue for the last twelve months as of Q4 2023 stands at $503.4 million, with a slight decline of -1.19%. These figures underline the concerns leading to Benchmark's price target revision.
InvestingPro Tips highlight the company's significant debt burden and the fact that management has been aggressively buying back shares. These actions could be seen as efforts to improve shareholder value, yet they come with the risk of further cash depletion, especially as the company is already quickly burning through cash. Notably, Noodles & Co. has experienced a significant return over the last week, but this should be viewed in the context of its volatility and the broader negative trend over the last month and year.
For investors seeking a deeper dive into Noodles & Co.'s financials and future prospects, InvestingPro offers additional tips. There are currently 17 more InvestingPro Tips available, which may provide further insights into the company's performance and valuation. Interested readers can unlock these tips and more comprehensive analysis with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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