uploads/2016/07/mnro-pm.png

Northcoast Research Downgrades Monro Muffler Brake to ‘Sell’

By

Updated

Price movement

Monro Muffler Brake (MNRO) has a market cap of $2.1 billion. It fell by 5.9% to close at $64.18 per share on July 14, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.3%, 4.8%, and -2.6%, respectively, on the same day.

MNRO is trading 0.89% below its 20-day moving average, 0.85% below its 50-day moving average, and 5.0% below its 200-day moving average.

Article continues below advertisement

Related ETFs and peers

The Vanguard Small-Cap ETF (VB) invests 0.07% of its holdings in MNRO. The ETF tracks the CRSP US Small Cap Index. The market-cap-weighted index includes the bottom 2%–15% of the investable universe. The YTD price movement of VB was 8.9% on July 14.

The iShares Russell 2000 Growth ETF (IWO) invests 0.28% of its holdings in MNRO. This ETF tracks a market-cap-weighted index of US small-cap growth stocks. The index selects from stocks ranked 1,001–3,000 by market cap based on two growth factors.

The market caps of MNRO’s competitors are as follows:

  • Genuine Parts Company (GPC) — $15.2 billion
  • Advance Auto Parts (AAP) — $12.1 billion
  • LKQ Corporation (LKQ) — $10.2 billion

Monro Muffler Brake’s rating

Northcoast Research has downgraded Monro Muffler Brake rating to “sell” from “neutral.”

Article continues below advertisement

Performance in 4Q16 and 2016

Monro Muffler Brake reported fiscal 4Q16 sales of $229.0 million—a rise of 4.5% compared to sales of $219.1 million in fiscal 4Q15. The company’s cost of sales as a percentage of sales fell by 3.2% and its operating income rose to 12.6% in fiscal 4Q16, compared to the same period last year.

Its net income and EPS (earnings per share) rose to $13.9 million and $0.42, respectively, in fiscal 4Q16, compared to $12.6 million and $0.38, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, Monro Muffler Brake (MNRO) reported sales of $943.7 million—a rise of 5.5% YoY (year-over-year). Its net income and EPS rose to $66.8 million and $2.00, respectively, in fiscal 2016, compared to $61.8 million and $1.88, respectively, in fiscal 2015.

Monro Muffler Brake’s cash rose by 3.3% and its inventories fell by 0.53% in fiscal 2016. Its current ratio and debt-to-equity ratio fell to 1.01x and 0.86x, respectively, in fiscal 2016—compared to 1.04x and 0.92x, respectively, in fiscal 2015.

Projections

Monro Muffler Brake (MNRO) made the following projections for fiscal 2017 and fiscal 1Q17:

Fiscal 2017

  • The company expects sales of $980 million–$1.0 billion based on current visibility, business and economic trends, and completed acquisitions. This guidance includes a comparable store sales fall of 2% to flat.
  • It expects EPS of $2.05–$2.20.

Fiscal 1Q17

  • The company expects sales of $230 million–$240 million.
  • It expects EPS of $0.47–$0.51.

In the next part, we’ll look at Wolverine World Wide (WWW).

Advertisement

More From Market Realist