Investors interested in Consumer Services - Miscellaneous stocks are likely familiar with SP Plus (SP - Free Report) and Monro Muffler Brake (MNRO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
SP Plus has a Zacks Rank of #2 (Buy), while Monro Muffler Brake has a Zacks Rank of #4 (Sell) right now. This means that SP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SP currently has a forward P/E ratio of 15.64, while MNRO has a forward P/E of 29.40. We also note that SP has a PEG ratio of 1.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MNRO currently has a PEG ratio of 4.90.
Another notable valuation metric for SP is its P/B ratio of 2.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MNRO has a P/B of 3.52.
These metrics, and several others, help SP earn a Value grade of A, while MNRO has been given a Value grade of D.
SP sticks out from MNRO in both our Zacks Rank and Style Scores models, so value investors will likely feel that SP is the better option right now.