Noodles & Company (NASDAQ:NDLS) shareholders have seen the share price descend 20% over the month. But that doesn’t change the fact that the returns over the last three years have been respectable. It beat the market return of 44% in that time, gaining 51%.
Noodles isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last 3 years Noodles saw its revenue shrink by 3.0% per year. The revenue growth might be lacking but the share price has gained 15% each year in that time. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Noodles’ balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Noodles provided a TSR of 17% over the last twelve months. But that was short of the market average. On the bright side, that’s still a gain, and it is certainly better than the yearly loss of about 6% endured over half a decade. It could well be that the business is stabilizing. It’s always interesting to track share price performance over the longer term. But to understand Noodles better, we need to consider many other factors. Case in point: We’ve spotted 1 warning sign for Noodles you should be aware of.
We will like Noodles better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.