Noodles & Co. Comes Back Down to Earth

By Chris Hill – Feb 27, 2014 at 7:23PM

NASDAQ: PNRA

Panera Bread Company

Noodles & Co.'s IPO was a market romance, but now the passion may be cooling.

Noodles & Company (NDLS -0.02%) saw shares fall today after the company reported earnings, missing expectations on both profit and revenue. The stock shot up 70% on its first day of trading last summer, when it IPO'd amid enthusiasm over stocks in the fast-casual dining space, but now the company may be falling back down to reality.

In this video from Thursday's Investor Beat, host Chris Hill and Motley Fool analyst David Hanson discuss Noodles & Company, and the fast-casual space. David says the business of fast casual just isn't as easy as the market thinks it is. Noodles & Company isn't founder-run like some of the other extremely successful businesses in this space, and is valued at a shocking 70 times next year's earnings. To David, this company lacks the same prospects as a Panera Bread (PNRA) or a Chipotle Mexican Grill (CMG 2.25%), and the valuation is far too overenthusiastic.

Chris Hill owns shares of Chipotle Mexican Grill. David Hanson owns shares of Panera Bread. The Motley Fool recommends and owns shares of Chipotle Mexican Grill and Panera Bread. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.