Monro Q2 Earnings: Can NasdaqGS:MNRO Hit Its $0.29 EPS Target?

in EARNINGS/INVESTING IDEAS by

Monro, Inc. (NasdaqGS:MNRO) is scheduled to report Q2 earnings results on October 28, 2020.

The company is expected to report earnings of $0.29/share on revenue of $293.7 million. The consensus earnings per share (EPS) of $0.29/share is based on a poll of 9 analysts and represents a decline in eps of −52.7% over the same quarter last year, when the company reported earnings of $0.62/share.

The revenue forecast of $293.7 million based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −9.4%. Last year the company reported $324.1 million in revenue for the quarter.

Expected to report EPS contraction of −52.7% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $293.72 $324.11 −9.4%
EPS $0.29 $0.62 −52.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 3 quarters, and met expectations 1 quarters.

What are your expectations from Monro, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 -$0.22 $0.15 168.2% Beat
Q4, 2020 $0.21 $0.08 −62.2% Missed
Q3, 2020 $0.61 $0.60 −1.6% Missed
Q2, 2020 $0.71 $0.62 −13.2% Missed
Q1, 2020 $0.66 $0.68 3.0% Beat
Q4, 2019 $0.51 $0.51 0.0% Met
Q3, 2019 $0.59 $0.61 2.5% Beat
Q2, 2019 $0.65 $0.67 3.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by falling −5.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $61.11 $57.58 −5.8% Decline
May 28, 2020 $62.04 $55.10 −11.2% Decline
January 30, 2020 $70.33 $62.70 −10.8% Decline
October 24, 2019 $80.55 $68.55 −14.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.99, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.99 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Monro, Inc. is currently trading at $43.96/share, down −3.5% for the day. The company is trading at approximately 53.9% of its 52-week high of $81.54/share. The company’s stock price is down −23.7% since the last earnings report and up 2.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 52.21 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:MNRO Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 38.58 and a forward P/E multiple of 34.78.

Monro, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.00. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date June 27, 2020
Stock Price (Current) $43.96
P/E Ratio 38.6x
P/E Ratio (Fwd) 34.8x
PEG Ratio −0.8
Total Debt / Total Capital 37.8%
Levered Free Cash Flow $77.252 million
EV / EBITDA 14.5x

Finbox

Monro, Inc. is a small-cap stock with a market capitalization of $1.464 billion and a total enterprise value of $2.239 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Monro, Inc. provides automotive undercar repair, and tire sales and services in the United States. It offers range of state inspections services on passenger cars, light trucks, and vans; products and services for brakes; mufflers and exhaust systems; and steering, drive train, suspension, and wheel alignment. The company also provides maintenance services, including oil change, heating and cooling system ‘flush and fill’ service, belt installation, fuel system service, and a transmission ‘flush and fill’ service. In addition, it replaces and services batteries, starters, and alternators; and offers inspection and air conditioning services. The company operates its stores under the brand names of Monro Auto Service and Tire Centers, Tread Quarters Discount Tire Auto Service Centers, Mr. Tire Auto Service Centers, Autotire Car Care Centers, Tire Warehouse Tires for Less, Tire Barn Warehouse, Ken Towery’s Tire & Auto Care, Tire Choice Auto Service Centers, and Car-X Tire & Auto. As of March 28, 2020, it operated 1,283 company-operated stores, 98 franchised locations, eight wholesale locations, three retread facilities, and two dealer-operated stores in 32 states. The company was formerly known as Monro Muffler Brake, Inc. and changed its name to Monro, Inc. in August 2017. Monro, Inc. was founded in 1957 and is headquartered in Rochester, New York.

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