Noodles & Company posts 377% EPS miss despite EBITDA surge
Restaurant chain near-doubles adjusted EBITDA guidance while planning 30-35 store closures to address negative equity position
Noodles & Company reported adjusted earnings that missed analyst estimates by 377% in the fourth quarter, though operational metrics showed significant improvement as the fast-casual chain executes a turnaround strategy centered on restaurant closures and margin expansion.
The Broomfield, Colorado-based company posted an adjusted loss per share of $0.43, compared with consensus expectations of a $0.09 loss, according to the Q4 2025 earnings release. Despite the earnings shortfall, adjusted EBITDA surged 89% to $7.6 million, while restaurant margins expanded 290 basis points to 14.1%, signaling meaningful progress in unit-level economics.
The operational improvements come at a strategic cost. Noodles plans to close 30 to 35 restaurants in 2026, according to Restaurant Dive, building on the 42 locations shuttered in 2025—33 company-owned and nine franchise units. The closures are designed to remove negative cash-flow restaurants and enhance profitability at remaining locations, part of a broader portfolio optimization effort across the restaurant industry that includes similar moves by Wendy's, Papa Johns, and Pizza Hut.
Management's forward guidance reflects confidence in the turnaround. The company projects first-quarter comparable sales growth of 9%, building on the preliminary Q4 system-wide comp increase of 6.6%, with company-owned restaurants up 7.3% and franchised locations rising 3.8%. For the full fiscal year 2026, Noodles forecasts adjusted EBITDA of $30 million to $35 million—representing a near-doubling from $22.5 million in 2025.
However, significant challenges remain. The company's financial position shows negative equity of approximately $45 million, with a book value per share of negative $6.65 on 5.85 million shares outstanding. The stock has rallied 68% following a reverse stock split but currently trades with a relative strength index of 29, indicating oversold conditions.
At $6.06 per share, Noodles' market capitalization stands at just $36.8 million, significantly below the average analyst target price of $1.75. The stock has a 52-week range of $3.57 to $10.00 and is currently down 7.5% in recent trading. Institutional investors hold 51.2% of shares, while insiders control 15.1%.
The earnings report encapsulates the delicate balancing act facing management: delivering the operational improvements necessary to restore profitability while managing a distressed balance sheet. The EBITDA surge and restaurant margin expansion suggest unit-level economics are moving in the right direction, but the planned store closures and negative equity highlight the substantial work still required to stabilize the business.
Investors will focus on whether the momentum in comparable sales continues and whether the aggressive EBITDA growth guidance can be achieved without further weakening the already tenuous financial position. With analyst coverage limited and the stock trading at a premium to consensus targets, the coming quarters will prove critical in determining whether Noodles & Company's turnaround strategy gains traction or encounters further headwinds.