Is Noodles & Co. overvalued or undervalued?

As of 27 April 2022, the valuation grade for Noodles & Co. has moved from fair to risky, indicating a significant deterioration in its financial outlook. The company is currently assessed as overvalued, particularly given its negative P/E ratio and troubling financial metrics. Key ratios include an EV to EBITDA of 8.36 and a Price to Book Value of -2.79, both of which highlight the company's struggles. Additionally, the ROCE stands at -7.24%, further underscoring its financial challenges.
In comparison to peers, Noodles & Co. exhibits a less favorable position; for instance, Carrols Restaurant Group, Inc. has a fair valuation with a P/E of 15.07 and an EV to EBITDA of 6.91, while Potbelly Corp. is rated attractive with an EV to EBITDA of 16.80. The stark contrast in these valuations suggests that Noodles & Co. is not only underperforming relative to its peers but also facing significant headwinds, as evidenced by its poor stock performance over the past year, down 62.56% compared to a 10.26% increase in the S&P 500.