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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, SP Plus is sporting a Zacks Rank of #2 (Buy), while Monro Muffler Brake has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SP has an improving earnings outlook. 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.
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 11.66, while MNRO has a forward P/E of 22.41. We also note that SP has a PEG ratio of 1.17. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MNRO currently has a PEG ratio of 1.95.
Another notable valuation metric for SP is its P/B ratio of 2.21. 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 2.36.
Based on these metrics and many more, SP holds a Value grade of B, while MNRO has 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.