Intrinsic value of Noodles & Company - NDLS

Previous Close

$6.55

  Intrinsic Value

$0.16

stock screener

  Rating & Target

str. sell

-98%

Previous close

$6.55

 
Intrinsic value

$0.16

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of NDLS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  466
  478
  491
  505
  521
  539
  557
  578
  600
  623
  648
  675
  704
  734
  766
  800
  835
  873
  913
  955
  1,000
  1,047
  1,096
  1,148
  1,203
  1,261
  1,322
  1,386
  1,453
  1,524
Variable operating expenses, $m
  530
  543
  558
  575
  593
  613
  634
  657
  682
  709
  737
  767
  799
  834
  870
  908
  949
  992
  1,038
  1,086
  1,136
  1,190
  1,246
  1,305
  1,367
  1,433
  1,502
  1,575
  1,651
  1,731
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  530
  543
  558
  575
  593
  613
  634
  657
  682
  709
  737
  767
  799
  834
  870
  908
  949
  992
  1,038
  1,086
  1,136
  1,190
  1,246
  1,305
  1,367
  1,433
  1,502
  1,575
  1,651
  1,731
Operating income, $m
  -64
  -66
  -68
  -70
  -72
  -74
  -77
  -80
  -83
  -86
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -143
  -149
  -156
  -164
  -172
  -180
  -189
  -198
  -208
EBITDA, $m
  -39
  -40
  -41
  -42
  -44
  -45
  -47
  -49
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -122
  -128
Interest expense (income), $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  20
  21
Earnings before tax, $m
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -88
  -91
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -218
  -228
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -88
  -91
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -218
  -228

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  189
  194
  199
  205
  212
  219
  226
  235
  244
  253
  263
  274
  286
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  466
  489
  512
  537
  563
  590
  619
Adjusted assets (=assets-cash), $m
  189
  194
  199
  205
  212
  219
  226
  235
  244
  253
  263
  274
  286
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  466
  489
  512
  537
  563
  590
  619
Revenue / Adjusted assets
  2.466
  2.464
  2.467
  2.463
  2.458
  2.461
  2.465
  2.460
  2.459
  2.462
  2.464
  2.464
  2.462
  2.463
  2.463
  2.462
  2.463
  2.459
  2.461
  2.461
  2.463
  2.464
  2.463
  2.464
  2.460
  2.463
  2.462
  2.462
  2.463
  2.462
Average production assets, $m
  171
  175
  180
  185
  191
  197
  204
  212
  220
  228
  237
  247
  257
  269
  280
  293
  306
  320
  334
  350
  366
  383
  401
  420
  440
  462
  484
  507
  532
  558
Working capital, $m
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
Total debt, $m
  61
  65
  69
  74
  79
  85
  91
  97
  105
  112
  121
  129
  139
  148
  159
  170
  182
  194
  207
  221
  236
  251
  267
  284
  302
  321
  341
  362
  384
  407
Total liabilities, $m
  153
  156
  161
  165
  171
  176
  183
  189
  196
  204
  212
  221
  230
  240
  251
  262
  273
  286
  299
  313
  327
  343
  359
  376
  394
  413
  433
  454
  476
  499
Total equity, $m
  37
  38
  39
  40
  41
  42
  44
  46
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
  120
Total liabilities and equity, $m
  190
  194
  200
  205
  212
  218
  227
  235
  243
  253
  263
  274
  285
  298
  311
  325
  339
  355
  371
  388
  406
  425
  445
  466
  489
  512
  537
  563
  590
  619
Debt-to-equity ratio
  1.660
  1.720
  1.780
  1.850
  1.920
  1.990
  2.070
  2.140
  2.210
  2.290
  2.360
  2.430
  2.500
  2.570
  2.630
  2.700
  2.760
  2.820
  2.880
  2.940
  2.990
  3.040
  3.090
  3.140
  3.190
  3.230
  3.270
  3.310
  3.350
  3.390
Adjusted equity ratio
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -88
  -91
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -218
  -228
Depreciation, amort., depletion, $m
  25
  26
  26
  27
  28
  29
  30
  31
  32
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
  80
Funds from operations, $m
  -42
  -43
  -45
  -46
  -48
  -49
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -116
  -122
  -128
  -135
  -142
  -149
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from operations, $m
  -42
  -43
  -44
  -45
  -47
  -49
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -71
  -74
  -77
  -81
  -85
  -89
  -93
  -98
  -103
  -108
  -113
  -119
  -125
  -131
  -138
  -145
Maintenance CAPEX, $m
  -24
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -76
New CAPEX, $m
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
Cash from investing activities, $m
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -45
  -48
  -50
  -52
  -55
  -58
  -61
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -102
Free cash flow, $m
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -121
  -126
  -132
  -139
  -145
  -152
  -160
  -168
  -176
  -184
  -193
  -203
  -213
  -224
  -235
  -247
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
Issuance/(repurchase) of shares, $m
  68
  70
  72
  74
  77
  80
  83
  86
  90
  93
  96
  101
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
  175
  184
  193
  202
  212
  223
  234
Cash from financing (excl. dividends), $m  
  71
  74
  76
  79
  82
  86
  89
  93
  97
  101
  104
  110
  114
  120
  125
  131
  138
  144
  151
  159
  167
  174
  183
  192
  202
  212
  222
  233
  245
  257
Total cash flow (excl. dividends), $m
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
Retained Cash Flow (-), $m
  -68
  -70
  -72
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -96
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -184
  -193
  -202
  -212
  -223
  -234
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -66
  -68
  -69
  -72
  -74
  -76
  -79
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -121
  -126
  -132
  -138
  -145
  -152
  -160
  -167
  -176
  -184
  -193
  -203
  -213
  -223
Discount rate, %
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
  -60
  -56
  -51
  -47
  -43
  -38
  -34
  -30
  -26
  -22
  -19
  -16
  -13
  -10
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  80.8
  65.3
  52.7
  42.5
  34.2
  27.6
  22.2
  17.8
  14.3
  11.5
  9.2
  7.4
  5.9
  4.8
  3.8
  3.1
  2.5
  2.0
  1.6
  1.3
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1

Noodles & Company develops and operates fast casual restaurants. The Company's menu includes a range of cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers. The Company has approximately 490 restaurants, including 420 Company-owned and 70 franchised locations, across 40 states, the District of Columbia and one Canadian province. The Company offers over 30 globally inspired Asian, Mediterranean and American dishes together on a single menu. The Company offers approximately 10 fresh vegetables and six proteins, including marinated steak, naturally raised pork, chicken, meatballs, shrimp and organic tofu. The Company offers Kids Meals, which includes sides, such as broccoli, carrots, fruit, applesauce and a portion of its housemade rice crispy treat. The Company's restaurants' locations include Arizona, California, Colorado, Delaware, New York, North Dakota, Ohio, Texas, Utah, Virginia, Washington and Wisconsin.

FINANCIAL RATIOS  of  Noodles & Company (NDLS)

Valuation Ratios
P/E Ratio -2.5
Price to Sales 0.4
Price to Book 7
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow -10.1
Growth Rates
Sales Growth Rate 7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14%
Cap. Spend. - 3 Yr. Gr. Rate -4.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 326.9%
Total Debt to Equity 326.9%
Interest Coverage -34
Management Effectiveness
Return On Assets -31.2%
Ret/ On Assets - 3 Yr. Avg. -10.5%
Return On Total Capital -52.7%
Ret/ On T. Cap. - 3 Yr. Avg. -18%
Return On Equity -120%
Return On Equity - 3 Yr. Avg. -41.2%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 73.3%
Gross Margin - 3 Yr. Avg. 73.5%
EBITDA Margin -8.2%
EBITDA Margin - 3 Yr. Avg. 1.3%
Operating Margin -14%
Oper. Margin - 3 Yr. Avg. -4.7%
Pre-Tax Margin -14.4%
Pre-Tax Margin - 3 Yr. Avg. -4.9%
Net Profit Margin -14.8%
Net Profit Margin - 3 Yr. Avg. -5%
Effective Tax Rate -2.9%
Eff/ Tax Rate - 3 Yr. Avg. 26.1%
Payout Ratio 0%

NDLS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NDLS stock intrinsic value calculation we used $456 million for the last fiscal year's total revenue generated by Noodles & Company. The default revenue input number comes from 0001 income statement of Noodles & Company. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NDLS stock valuation model: a) initial revenue growth rate of 2.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.6%, whose default value for NDLS is calculated based on our internal credit rating of Noodles & Company, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Noodles & Company.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NDLS stock the variable cost ratio is equal to 113.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NDLS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Noodles & Company.

Corporate tax rate of 27% is the nominal tax rate for Noodles & Company. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NDLS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NDLS are equal to 36.6%.

Life of production assets of 7 years is the average useful life of capital assets used in Noodles & Company operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NDLS is equal to -5.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $35.861 million for Noodles & Company - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 43.921 million for Noodles & Company is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Noodles & Company at the current share price and the inputted number of shares is $0.3 billion.

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