Monro Muffler Brake, Inc. (MNRO - Snapshot Report) is suffering from negative same-store sales and declining profit margins, which has caused analysts to lower their estimates for both 2013 and 2014. It is a Zacks Rank #5 (Strong Sell) stock.
Monro Muffler operates 939 automotive repair and tire service stores in the U.S. It operates under the Monro Muffler Brake and Service, Mr. Tire, Tread Quarters Discount Tires, Autotire, Tire Warehouse, Tire Barn and Towery's Tire and Auto Care brands. On January 29, the company reported third quarter 2013 earnings per share of 35 cents, a penny shy of the Zacks Consensus Estimate. It marked the company's 4th straight earnings miss. Total sales increased 8%, but same-store sales fell a painful 5.9%. Meanwhile, gross profit declined as a percentage of sales from 38.4% to 36.6% while operating income fell 17% year-over-year.
Following the Q3 earnings release, analysts revised their estimates lower for both 2013 and 2014, sending the stock to a Zacks Rank #5 (Strong Sell). The Zacks Industry Rank isn't very bullish either. The 'Consumer Services - Miscellaneous' industry ranks in the bottom 11% of all the industries that we rank.
In addition to negative earnings momentum, shares look a bit pricey too. Monro trades at 22x 12-month forward earnings, well ahead of the industry median of 12x and the stock's historical median of 19x. The stock also carries a long-term 'Underperform' Zacks Recommendation.
Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.