Is Noodles & Co. overvalued or undervalued?

As of 27 April 2022, the valuation grade for Noodles & Co. has moved from attractive to risky, indicating a significant deterioration in its financial outlook. The company is currently considered overvalued, particularly given its negative P/E ratio and troubling financial metrics. Key ratios include an EV to EBITDA of 8.36, an EV to Sales of 0.34, and a Price to Book Value of -2.79, all of which suggest that the company is struggling to generate positive returns.
In comparison to its peers, Noodles & Co. has a notably lower EV to EBITDA ratio than Potbelly Corp. at 19.35 and Carrols Restaurant Group, Inc. at 6.91, indicating that it may not be as attractive as these competitors. Additionally, the company's one-year stock return of -46.00% starkly contrasts with the S&P 500's return of 17.14%, reinforcing the perception of overvaluation and the challenges facing Noodles & Co. in the current market environment.