Investors interested in stocks from the Consumer Services - Miscellaneous sector have probably already heard of SP Plus (SP - Free Report) and Monro Muffler Brake (MNRO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, SP Plus is sporting a Zacks Rank of #1 (Strong Buy), while Monro Muffler Brake has a Zacks Rank of #2 (Buy). 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 just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SP currently has a forward P/E ratio of 11.23, while MNRO has a forward P/E of 28.64. We also note that SP has a PEG ratio of 1.12. 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 2.29.
Another notable valuation metric for SP is its P/B ratio of 1.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MNRO has a P/B of 3.39.
These metrics, and several others, help SP earn a Value grade of B, while MNRO has been given a Value grade of C.
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.