Monro Muffler Brake, Inc. - Momentum

Monro Muffler Brake, Inc. (MNRO) recently jumped to a new multi-year high after reporting better than expected Q2 results on July 22 that included a 5% earnings surprise for this Zacks #2 rank stock.

Second-Quarter Results

Revenue for the period was up 24% from last year to $158 million, with same-store sales up a very solid 5.1%. Earnings also came in strong at 61 cents, 3 cents ahead of the Zacks Consensus Estimate, moving the company's average earnings surprise over the last four quarters to 7%.

Monro did see some slippage in its gross margin, falling to 42% from 44% as the company advances in the lower margin tire business related to its acquisition of 79 tire stores in 2010 and throughout 2011. Monro did however improve on operating expenses, where costs fell to 27% of revenue from 31% last year.

Balnce Sheet

Monro doesn't have a huge cash position, standing at just $3 million, but it did pay down some debt during the quarter, with its total debt falling $9 million to $89 million.

Estimates

We saw a little bit of movement in estimates off the good quarter, with the current year adding 2 cents to $2.02 and the next year holding steady at $2.42, a solid 20% growth projection.

Valuation

After the recent string of gains, MNRO does look a bit pricey, trading with a forward P/E of 20X against its peers 16X.

2-Year Chart

MNRO recently hit a new multi-year high at $42.40 on the good quarter before pulling back a bit in the choppy market. Look for support from the trend line on any weakness, take a look below.

Read the June 28 MNRO article here

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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