Over the last six months, Noodles’s shares have sunk to $0.89, producing a disappointing 7.7% loss – a stark contrast to the S&P 500’s 4.1% gain. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Is there a buying opportunity in Noodles, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Do We Think Noodles Will Underperform?

Despite the more favorable entry price, we’re swiping left on Noodles for now. Here are three reasons why there are better opportunities than NDLS and a stock we’d rather own.

1. Shrinking Same-Store Sales Indicate Waning Demand

Same-store sales show the change in sales at restaurants open for at least a year. This is a key performance indicator because it measures organic growth.

Noodles’s demand has been shrinking over the last two years as its same-store sales have averaged 1.9% annual declines.

Noodles Same-Store Sales Growth

2. Cash Burn Ignites Concerns

Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

While Noodles’s free cash flow broke even this quarter, the broader story hasn’t been so clean. Noodles’s demanding reinvestments have drained its resources over the last two years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 4.2%, meaning it lit $4.17 of cash on fire for every $100 in revenue.

Noodles Trailing 12-Month Free Cash Flow Margin

3. Short Cash Runway Exposes Shareholders to Potential Dilution

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Noodles burned through $18.45 million of cash over the last year, and its $282.2 million of debt exceeds the $1.40 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Noodles Net Debt Position

Unless the Noodles’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Noodles until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

Japanese Prime Minister Shigeru Ishiba, also president of Japan’s ruling Liberal Democratic Party (LDP), meets the press at the LDP headquarters in Tokyo, Japan, July 20, 2025. (Franck Robichon/Pool via Xinhua)

Japanese Prime Minister Shigeru Ishiba said he will stay at the PM post despite the setback in Sunday’s upper house election.

TOKYO, July 21 (Xinhua) — In a landmark political setback, Japan’s ruling coalition has lost its majority in the House of Councillors, signaling deep public dissatisfaction with the government and casting doubts over Prime Minister Shigeru Ishiba’s ability to govern effectively amid mounting domestic and international pressures.

According to the final vote count completed in the early hours of Monday, the LDP secured only 39 seats of the 125 contested seats while Komeito took eight, below their combined target of 50.

Even with their existing non-contested seats of 75, they now held fewer than the 125 seats needed for a majority in the 248-member upper chamber.

The defeat follows a similar outcome in the 2024 House of Representatives election, leaving the ruling bloc a minority in both chambers of the parliament, a historic first since the LDP’s founding in 1955.

The election results underscore the widespread collapse of support for the ruling parties across both urban and rural constituencies. In Japan’s 32 single-member electoral districts, the LDP managed to win only 14 seats, marking a major decline even in traditional conservative bastions such as Tohoku and Shikoku.

Widespread voter dissatisfaction with the government’s handling of inflation and economic policy was the dominant theme of the campaign. Surveys showed that the electorate’s top concern was “countermeasures against rising prices,” far outranking national security or constitutional reform.

Previous controversies, including soaring rice prices, ministerial gaffes, and problematic voucher policies, further eroded public trust in the government.

In contrast, opposition parties successfully appealed to frustrated voters by focusing on bread-and-butter issues. The Democratic Party for the People (DPP) emerged as a surprise success, increasing its seat count from nine to 22.

Running under the slogan “A Summer to Raise Take-Home Pay,” the party proposed concrete policies such as raising the tax exemption threshold for part-time and temporary workers, and scrapping Japan’s gasoline surtax.

Another major winner was the far-right populist Sanseito, which grew from two seats to 15. Embracing a nationalist “Japan First” message and advocating hardline anti-immigration policies, the party leveraged social media to punch far above its weight in the mainstream media landscape.

Associate Professor Shinichi Yamaguchi of the International University noted that Sanseito succeeded in translating online sentiment into real-world electoral gains, setting the agenda on immigration and social identity politics.

Japanese Prime Minister Shigeru Ishiba, also president of Japan’s ruling Liberal Democratic Party (LDP), meets the press at the LDP headquarters in Tokyo, Japan, July 20, 2025. (Franck Robichon/Pool via Xinhua)

Prime Minister Shigeru Ishiba, who had set the 50-seat benchmark as a minimum threshold for victory, expressed his intention to remain in office despite the setback.

However, the twin losses in both chambers place his leadership under intense scrutiny and severely limit his administration’s capacity to push through legislation without the cooperation of opposition parties.

Meanwhile, pressure is mounting from abroad. U.S. President Donald Trump has announced that Washington is preparing to impose 25-percent reciprocal tariffs on Japanese goods starting Aug. 1.

While Japan claimed the election outcome will not impact negotiations, observers are skeptical that Japan will retain strong bargaining power under a weakened administration.

As Japan’s upper house election does not directly determine the premiership, Ishiba’s continuation in office is technically secure for now. The fractured nature of the opposition, which includes deep divides over constitutional and security policy, makes the change of leadership unlikely.

Nonetheless, internal dissent within the LDP is growing. Some party figures are already discussing the timing of a potential leadership change, local media reported.

The extraordinary session of the Diet this autumn is likely to become a major test. The government must pass a supplementary budget that includes further inflation relief and measures to counter U.S. trade actions. Failure to do so could paralyze the administration.

Political observers warn that Ishiba’s leadership is likely to be challenged if instability persists.

As the ruling bloc loses its historical dominance, the future direction of Japanese politics and its ability to navigate domestic hardship and international pressure remains fraught with uncertainty. ■

Stocks under $10 pique our interest because they have room to grow (as well as the most affordable option contract premiums). That doesn’t mean they’re bargains though, and we urge investors to be careful as many have risky business models.

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ADT (ADT)

Share Price: $8.45

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Share Price: $6.19

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Sales were flat over the last two years, indicating it’s failed to expand this cycle Sales over the last two years were less profitable as its earnings per share fell by 47.5% annually while its revenue was flat 6 percentage point decline in its free cash flow margin over the last four years reflects the company’s increased investments to defend its market position

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Share Price: $1.78

Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.

Why Should You Dump DDD?

Japan is in political flux after Prime Minister Shigeru Ishiba’s ruling coalition lost its upper house majority for the first time in decades. With rising inflation, internal party unrest, and looming US tariffs, Ishiba vows to stay — but opposition parties are circling, and a far-right populist wave is gaining ground. Can his government survive? read more

Japan’s Prime Minister Shigeru Ishiba attends a press conference at the headquarters of the Liberal Democratic Party (LDP) in Tokyo on July 21, 2025, the day after the prime minister’s coalition lost its upper house majority. File Image/Pool via Reuters

Japan’s political leadership is facing turmoil as Prime Minister Shigeru Ishiba’s ruling coalition suffered a defeat in the recent upper house elections.

With mounting pressure from opposition, growing dissatisfaction within his own party, and a looming trade standoff with the United States, Ishiba is now contending with the most turbulent phase of his premiership since taking office last October.

The results from Sunday’s election dealt a substantial blow to the Liberal Democratic Party (LDP) and its coalition partner Komeito.

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Together, the two parties secured only 47 seats in the 248-member upper house — falling short of the 50-seat threshold required to retain a majority.

Half the seats were contested in this round. This outcome means the coalition now lacks a majority in both chambers of the Japanese Diet, having already lost control of the more influential lower house during the October elections last year.

Shigeru Ishiba, Japanese Prime Minister and president of the ruling Liberal Democratic Party (LDP), places a red paper rose on the name of an elected candidate at the LDP headquarters, on the day of Upper House election, in Tokyo, Japan, July 20, 2025. File Image/Pool via Reuters

The loss is historic. For the first time since the LDP’s founding in 1955, a sitting prime minister from the party is governing without holding a majority in at least one chamber of parliament.

This result comes on the heels of widespread voter frustration over rising consumer costs, stagnant wage growth, and the government’s perceived failure to provide adequate relief.

Despite the election loss, Ishiba has insisted on staying in office. Speaking to reporters, he said, “I will stay in office and do everything in my power to chart a path toward resolving these challenges.”

He also noted that he intends to engage directly with US President Donald Trump to secure a trade agreement before the impending August 1 deadline for additional tariffs.

In a separate statement to NHK, Ishiba acknowledged the public sentiment behind the election outcome: “That’s right. It’s a difficult situation, and we have to take it very humbly and seriously.”

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Why Ishiba lost his majority

Economic concerns were at the heart of voter discontent. Over the past year, households have been squeezed by rising prices across essential commodities, including Japan’s staple grain — rice.

Public frustration has only increased by declining real wages and the government’s inability to implement effective policies to counter inflationary pressure.

The prime minister expressed awareness of these concerns. “While I painfully feel my serious responsibility over the election results, I believe I must also fulfill my responsibility I bear for the country and the people so as not to cause politics to stall or go adrift,” he said.

Ishiba’s administration has so far resisted calls to reduce the consumption tax, despite growing popular demand and opposition campaigning centered on such relief.

“Polls show that most households want a cut to the consumption tax to address inflation, something that the LDP opposes,” said David Boling of Eurasia Group. “Opposition parties seized on it and hammered that message home.”

In contrast, rival parties have pledged increased social welfare spending and tax cuts. This strategy helped them win votes, especially among economically strained demographics.

Adding further strain to the economic outlook is the concern surrounding Japan’s public debt, already the largest in the world.

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The LDP has been advocating fiscal restraint amid a jittery government bond market, where investor confidence has been slipping.

Internal dissent within the LDP

While Ishiba remains publicly committed to continuing as prime minister, dissatisfaction is growing within the ranks of his own party. Several senior figures have reportedly questioned his leadership following the election outcome.

Among them is former Prime Minister Taro Aso, a prominent faction leader within the LDP, who was quoted by TV Asahi as saying he “couldn’t accept” Ishiba staying on as leader.

Local media reports suggest that senior LDP members met on Sunday evening to discuss the possibility of Ishiba stepping down.

According to the Sankei newspaper, the meeting reflected serious concerns about the future of the party’s governance under his leadership.

When asked about these internal calls for his resignation, Ishiba said: “It is natural that there are various opinions within the party.”

Although the LDP remains the largest party in parliament, its inability to pass legislation unilaterally will likely require negotiation with the fragmented opposition.

Analysts believe Ishiba may now have to build support for individual policies through ad hoc alliances in order to keep the government functioning.

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How Opposition is reacting

The electoral results provided a boost to opposition parties. The Constitutional Democratic Party of Japan (CDPJ), led by Yoshihiko Noda, secured 22 seats in the upper house, bringing its total to 37.

Following the vote, Noda announced that he was considering introducing a no-confidence motion against the Ishiba government, arguing that the election outcome demonstrated a lack of public trust in the current leadership.

The centre-right Democratic Party for the People also increased its standing, finishing with 22 seats.

However, despite the gains made by individual parties, the broader opposition remains fragmented across roughly a dozen parties, making it difficult to form a cohesive alternative to the ruling coalition.

Any attempt to topple Ishiba’s government through a no-confidence vote would need broad support from across these disparate groups, a scenario that currently appears unlikely.

What about Sanseito

While the traditional parties battled for control, the election also saw a dramatic rise in support for the far-right Sanseito party.

Founded during the Covid-19 pandemic, the party grew its influence through online platforms like YouTube, often promoting conspiracy theories related to vaccines and elite global networks.

Sanseito increased its representation from one seat to 15, becoming one of the most notable political stories of the election.

Their “Japanese First” slogan and strong anti-immigration rhetoric struck a chord with disillusioned voters who felt neglected by mainstream political discourse.

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Party leader Sohei Kamiya, a former supermarket manager and English teacher, has previously cited European right-wing movements like Germany’s Alternative für Deutschland (AfD) and the UK’s Reform Party as inspiration for Sanseito’s political model.

Supporters of Sanseito often express concerns about immigration and cultural erosion.

One voter, 25-year-old graduate student Yu Nagai, told AFP: “I am attending graduate school but there are no Japanese around me. All of them are foreigners. When I look at the way compensation and money are spent on foreigners, I think that Japanese people are a bit disrespected.”

Although foreign-born residents make up only about 3 per cent of Japan’s population, a record 3.8 million foreigners now live in the country.

The influx — boosted by tourism and labour shortages — has sparked increased visibility and debate around immigration policy, especially in urban centres.

How Trump’s tariff threats play into this

The most pressing foreign policy issue facing Ishiba’s government is the ongoing trade standoff with the United States.

With a 25 per cent tariff on Japanese automobiles set to come into effect on August 1, the urgency to strike a mutually beneficial deal with Washington has become paramount.

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Ishiba has stated that he hopes to meet with US President Donald Trump soon to resolve the matter.

“We are engaged in extremely critical tariff negotiations with the United States … we must never ruin these negotiations. It is only natural to devote our complete dedication and energy to realising our national interests,” Ishiba told TV Tokyo.

The economic implications of the proposed tariffs are significant. Japan’s automobile sector, which comprises roughly 8 per cent of the national workforce, has already begun to feel the strain.

Exports to the US have dropped sharply, fuelling concerns of an impending recession.

Japan’s chief trade negotiator Ryosei Akazawa has made multiple trips to Washington in recent months. His latest visit, which began Monday morning, is his eighth in the past three months.

The US administration has voiced its displeasure with Japan’s trade practices, particularly over what it perceives as barriers to American goods such as rice and cars.

Trump has also criticised the lack of meaningful progress in negotiations, despite Japan’s ongoing grain shortages.

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With inputs from agencies

The embattled Premier said he would remain in office to oversee tariff talks with the US and rising consumer prices.

– Japanese Prime Minister Shigeru Ishiba vowed to remain in office on July 21 after his ruling coalition suffered a bruising defeat in Upper House elections, prompting some of his own party to deliberate his future as the opposition weighed a no-confidence motion.

The embattled Premier told a news conference he would remain in office to oversee tariff talks with the US and other pressing matters such as rising consumer prices that are straining the world’s fourth-largest economy.

“I will stay in office and do everything in my power to chart a path toward resolving these challenges,” Mr Ishiba said, adding that he intended to speak directly to US President Donald Trump as soon as possible and deliver tangible results.

The 68-year-old veteran Liberal Democratic Party (LDP) lawmaker also acknowledged his “heavy responsibility” for the election outcome, but said: “I will fulfil my responsibility for the people” who made the LDP the largest force in Parliament.

Mr Ishiba said he has no plans to change the LDP’s leadership in the wake of the election setback. But he added he will consider whether to reshuffle the line-up of LDP executives when their current terms end in September, as well as a revamp of his Cabinet.

Analysts say his days may be numbered, having also lost control of the more powerful Lower House in elections in 2024, and shedding votes on July 20 to opposition parties pledging to cut taxes and tighten immigration policies.

“The political situation has become fluid and could lead to a leadership change or the reshuffling of the coalition in coming months, but Prime Minister Shigeru Ishiba will likely stay to complete the tariff negotiations with the US for now,” said Oxford Economics’ lead Japan economist Norihiro Yamaguchi.

Facing a voter backlash over rising consumer prices, investors fear his administration will now be more beholden to opposition parties advocating tax cuts and welfare spending that the world’s most indebted country can ill afford. Markets in Japan were closed for a holiday on July 21, although the yen strengthened and Nikkei futures rose slightly, as the election results appeared to be priced in.

Yields on Japanese government bonds sold off sharply ahead of the ballot as polls showed the ruling coalition – which had been calling for fiscal restraint – was likely to lose its majority in the Upper House.

Adding to the economic anxiety, Mr Ishiba’s lack of progress in averting tariffs set to be imposed by its biggest trading partner, the US, on Aug 1 appears to have frustrated some voters.

“Had the ruling party resolved even one of these issues, it (its approval rate) would have gone up, but we didn’t feel anything, and it seems like the US would continue to push us around,” Mr Hideaki Matsuda, a 60-year-old company manager, said outside Tokyo’s bustling Shinjuku station on the morning of July 21.

Japan’s chief tariff negotiator Ryosei Akazawa departed for trade talks in Washington on the morning of July 21, his eighth visit in three months.

Populist politics

Mr Ishiba’s Liberal Democratic Party, which has ruled Japan for most of its post-war history, and coalition partner Komeito returned 47 seats, short of the 50 seats it needed to ensure a majority in the 248-seat Upper Chamber in an election where half the seats were up for grabs.

The leader of the main opposition Constitutional Democratic Party (CDPJ), Mr Yoshihiko Noda, said on July 20 he is considering submitting a vote of non-confidence in the Ishiba administration as the result showed it did not have voters’ trust.

The CDPJ returned 22 seats in the ballot, finishing second.

Some senior LDP lawmakers were also quietly voicing doubts over whether Mr Ishiba should stay, according to local media reports on July 21.

Among them was former prime minister Taro Aso, leader of a powerful faction within the ruling party, who said he “couldn’t accept” Mr Ishiba staying on, Japan’s TV Asahi reported. Senior party members including Mr Aso met on the evening of July 20 to discuss whether Mr Ishiba should resign, Sankei newspaper reported.

The far-right Sanseito party clocked the biggest gains of the night, adding 14 seats to one elected previously.

Launched on YouTube during the pandemic by spreading conspiracy theories about vaccinations and a cabal of global elites, the party found wider appeal with its “Japanese First” campaign and warnings about a “silent invasion” of foreigners. Dragging once-fringe rhetoric into the mainstream, its success could mark the arrival of populist politics in Japan, which until now has failed to take root as it has in the US and western Europe.

Sanseito’s party leader Sohei Kamiya, a former supermarket manager and English teacher, has previously pointed to Germany’s AfD and Reform UK as a possible blueprint for future success.

Debate on sales tax cut

Mr Ishiba on July 21 stressed the need to establish a common understanding among parties on the pros and cons of cutting the country’s sales tax rate.

Cutting the sales tax could increase household income temporarily, but would raise questions on how to pay for Japan’s ballooning social welfare and pension costs, Mr Ishiba told a news conference.

“There needs to be a common understanding over the facts” on the pros and cons of a sales tax cut, Mr Ishiba said. “Just looking at one side of the debate won’t do,” he added.

The Premier has repeatedly brushed aside calls from opposition parties to cut Japan’s sales tax rate, currently set at 10 per cent except for an 8 per cent levy on food products.

In the news conference, Mr Ishiba urged other parties to join discussions on how to cushion the blow from rising inflation, while being mindful of the responsibility to keep Japan’s fiscal house in order. REUTERS, KYODO NEWS