Investors with an interest in Consumer Services - Miscellaneous stocks have likely encountered both 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, both SP Plus and Monro Muffler Brake are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SP currently has a forward P/E ratio of 12.89, while MNRO has a forward P/E of 32.34. We also note that SP has a PEG ratio of 1.29. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MNRO currently has a PEG ratio of 2.59.
Another notable valuation metric for SP is its P/B ratio of 2.08. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MNRO has a P/B of 3.77.
These metrics, and several others, help SP earn a Value grade of A, while MNRO has been given a Value grade of C.
Both SP and MNRO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SP is the superior value option right now.