Noodles & Co (NDLS), Chipotle Mexican Grill, Inc. (CMG): A Hot Restaurant Chain IPO With an Expensive Valuation

The company estimates that it will have around 80 new restaurants by the end of 2014, a 3.7% unit growth from the current base. The diluted earnings per share from continuing operations is expected to be 3%-5% lower than the earnings per share from continuing operations of $3.14 in 2013. Darden Restaurants, Inc. (NYSE:DRI) might experience 4%-6% growth in earnings per share from continuing operations, however, thanks to lower acquisition and purchasing accounting costs for Yard House acquisitions.Income investors might love Darden due to its decent dividend yield at 4.4% as well, with a reasonable payout ratio of around 64%.

My Foolish take

Noodles & Co (NASDAQ:NDLS), with its consistent comparable-restaurant sales growth and high growth in its operating performance, might be a good business to own in the long run for growth investors. Because of its extremely high valuation, however, I would not consider its current price to be a good price to pay at the moment. Personally, I would rather wait for any future price corrections before initiating a long position in this stock.

The article A Hot Restaurant Chain IPO With an Expensive Valuation originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill. The Motley Fool owns shares of Chipotle Mexican Grill and Darden Restaurants. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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