Stock Buy: Monro Muffler Brake, Inc.

Monro Muffler Brake, Inc. (MNRO: 38.03 0.00 0.00%) continues to trade near its all-time high on better than expected Q4 results from late May that included a 12% earnings surprise. With an average earnings surprise of 7% over the last year and estimates on the upswing, shares of MNRO have some solid upward momentum.

Fourth-Quarter Results

Our last look at the company's business came on May 27 with better than expected Q1 results. Revenue for the period was up 26% from last year to a record $147 million. Earnings also came in strong at 28 cents, 12% ahead of the Zacks Consensus Estimate, pushing its average earnings surprise to 7% over the last four quarters.

The company also saw some solid margin expansion, with gross margin adding 60 basis points to 39% on improved labor productivity.

Balance Sheet

Although Monro's cash and equivalents of $11 million might not seem that impressive on first glance, the company's balance sheet is still in good shape with just $99 million in total debt.

Estimates

The solid quarter sent estimates higher, with the current year adding 9 cents to $2.00 and the next year adding 15 cents to $2.42, a bullish 21% growth projection.

Valuation

After the recent string of gains, shares of MNRO trade at a premium to their peers with a forward P/E multiple of 18.5X.

2-Year Chart

Shares of this Zacks #2 rank stock have been pressuring the all-time high for the last few months without being able to muster the strength to push higher. Look for support at the trend line on any weakness, take a look below.

Read the Feb 16 MNRO article here

 

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