Monro Muffler Brake Inc.

Monro Muffler Brake Inc. (MNRO - Snapshot Report) raised full-year 2009 guidance after posting record sales in the second-quarter. The company has surprised on estimates 2 out of the last 4 quarters by an average of 4.10%. Monro has a forward P/E of 13.2.

Company Description

Monro Muffler specializes in undercar repair and tire services at stores under the names Monro Muffler Brake and Service, Mr. Tire and Tread Quarters Discount Tires. It operates 709 stores and has 14 dealer locations in 18 mid-eastern states. 35 of the Monro Muffler Brake and Service shops are located in BJ's stores.

Sales Hit a Record in the Second-Quarter 2009

On Oct 21, Monro reported second-quarter 2009 earnings that beat Wall Street estimates by 5.56%. Net income was a record $7.7 million, or 38 cents per share, compared to $6.5 million, or 29 cents, for the second-quarter 2008. This was at the high end of the company's guidance range. Analysts expected only 36 cents.

Sales rose 7% to a record $119.9 million compared to $112 million in the year ago period. Comparable store sales climbed 4.5%, which included a 6.6% increase in the former ProCare stores. Sales increased across all segments with a 6% jump for brakes, 6% for maintenance services, 7% for alignments and 4% for tires.

Sales growth was attributed to strong in-store sales execution and effective advertising campaigns.

Full-Year 2009 Guidance Rises

Monro is bullish about the full-year given the company's performance in the first half of the year. The third quarter started out strongly, with same store sales up approximately 4% in October. Based on current trends, the company sees third-quarter comparable sales growth in the range of 2% to 4%.

Earnings per share are expected to be in the range of 27 cents to 29 cents for the third quarter, up from 25 cents in the third-quarter 2008.

Monro also raised its full-year 2009 forecast to the range of $1.14 to $1.19 from $1.10 to $1.18. Sales are expected between $460 to $465 million with comparable store sales growth of 3% to 4%.

The company also expects to announce a mid-sized acquisition deal by the end of the third quarter.

2009 Full-Year Estimates Rise

Given the company's guidance range, covering analysts raised estimates to be in line with the forecast. Full-year estimates rose a penny to $1.19 in the last 30 days. Third-quarter consensus estimates are unchanged in the last 90 days at 28 cents.

Value Fundamentals

Monro Muffler Brake is a Zacks #1 Rank (Strong Buy). It is trading at 13.2x forward earnings. MNRO's price-to-book is 1.64. The company has a solid 5-year average return on equity (ROE) of 12.09%.