IB Net Payout Yields Model

Are Noodles & Company and Potbelly Growing Fast Enough to Match Their IPO Hype?

Something just doesn't appear right with Noodles & Company (NASDAQ: NDLS  ) . The hot IPO from the summer of 2013 surged to over $52.50 on the promises of a strong restaurant concept growing from a regional chain to a massive national operation, but the reported financials don't deliver on that promise.

The fast-casual restaurant chain that focuses on noodles and pasta dishes had investors envisioning a Chipotle Mexican Grill (NYSE: CMG  ) type of story, but the numbers never added up. The company only operates 372 systemwide locations in 29 states, offering the long-term potential growth that initially excited investors similar to fellow hot IPO Potbelly (NASDAQ: PBPB  ) . At a fraction of the size, though, neither chain is able to match the growth of Chipotle, which has a vastly larger network of restaurants. Do these companies have the ability to eventually grow into their valuation and provide growth opportunities?

Read the full article here.

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