What Happened?
Shares of casual restaurant chain Noodles & Company (NASDAQ: NDLS) fell 9.1% in the afternoon session after investors continued to sell off shares amid concerns over the company's poor financial health and recent underperformance.
The decline occurred on unusually high trading volume, which was over 33% above the 50-day average, signaling strong selling pressure. This move extended a recent downturn, as the stock had already fallen more than 6% during the previous trading session. Concerns appeared to focus on the company's weak fundamentals, including negative revenue growth and a negative operating margin over the last twelve months. Adding to the negative sentiment, the company's high debt-to-equity ratio and reports of individual restaurant closures further soured investor confidence.
The shares closed the day at $0.70, down 11.1% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Noodles? Access our full analysis report here.
What Is The Market Telling Us
Noodles’s shares are extremely volatile and have had 79 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 23.2% on the news that the company reported disappointing second-quarter 2025 financial results and lowered its full-year guidance. The fast-casual restaurant chain missed analyst expectations across the board. Revenue was $126.4 million, falling short of the $131.6 million consensus estimate. The company's adjusted loss per share of $0.12 was double the $0.06 loss analysts had anticipated. Profitability also deteriorated significantly, with the operating margin plummeting to negative 11.7% from a positive 1% in the same quarter last year, reflecting rising costs that the company could not pass on to customers. Compounding the issue, Noodles & Co. substantially lowered its full-year revenue outlook to a midpoint of $491 million, a 3.3% decrease from its prior forecast and below Wall Street's expectations. The collection of negative results prompted a sell-off in the shares.
Noodles is up 22% since the beginning of the year, but at $0.72 per share, it is still trading 57.6% below its 52-week high of $1.69 from February 2025. Investors who bought $1,000 worth of Noodles’s shares 5 years ago would now be looking at an investment worth $90.64.
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