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Noodles in the Soup?

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December 27, 2013 – Comments (0) | RELATED TICKERS: NDLS

Board: Pencils Palace

Author: pencils2

Today Noodles fell down to $33.67, putting the company under the $1 billion value mark. I continue to see a lot of potential for Noodles over the long haul, but am still comfortable sitting on the sidelines until the business proves itself a bit more (particularly in areas such as margins, comparable store sales, and cash flow production).

CEO Kevin Reddy apparently sold all of his position in the company on December 11 at $37.92 per share. Selling 101,894 shares -- his entire position -- for nearly $4 million does not exactly strike me as a vote of confidence. There may be more to the story, but it confirms my inclinations to sit this one out and continue to follow and learn about the company.

The stock is falling to IPO levels and looking more reasonably valued (slightly) in the process. The P/E now stands around 156, so I wouldn't call the stock a value play yet. This is one to keep an eye on, especially if the market continues to pummel the stock. I'm not sure if there is any good explanation for Kevin Reddy selling all of his shares, but I imagine that question will come up soon.

Best,
David K 

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