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Why Noodles & Co. Stock Gained 22% in March

By Demitri Kalogeropoulos - Apr 5, 2018 at 3:08PM

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The fast-casual restaurant chain issued an optimistic forecast for 2018 that put investors in a good mood.

What happened

Fast-casual restaurant chain Noodles & Co. (NDLS -2.68%) trounced the market last month with a 22% spike, according to data provided by S&P Global Market Intelligence.

^SPX Chart

^SPX data by YCharts.

The rally pushed shares solidly ahead of the S&P 500 for the trailing 12 months, but the stock remains down sharply from its initial public offering price back in 2013.

Various types of dried pasta in small bowls

Image source: Getty Images.

So what

March's bounce came following fourth-quarter results that showed solid progress in the company's turnaround. Comparable-store sales fell 0.9% compared to a 3.5% drop in the prior quarter. Profitability rose by over 3 percentage points to 15.1%. "These improved results give us confidence that we are gaining traction as we execute our strategic roadmap," CEO Dave Boennighausen said in a press release.

Now what

Investors were even happier about management's optimistic outlook for the new year. Comps should be "modestly positive" in 2018, they said, which would mark the first time in four years that sales didn't shrink. Noodles & Co is also hoping that new menu options, as well as a focus on takeaway and delivery orders, will help it get back to consistent profits now that revenue has stabilized.

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