MNRO

Monro Inc

Consumer


Presented:08/06/2019
Price:$87.46
Cap:$2.91B
Current Price:$27.28
Cap:$0.82B

Presented

Date08/06/2019
Price$87.46
Market Cap$2.91B
Ent Value$3.47B
P/E Ratio36.32x
Book Value$21.10
Div Yield1.01%
Shares O/S33.22M
Ave Daily Vol331,546
Short Int22.64%

Current

Price$27.28
Market Cap$0.82B
Monro, Inc. engages in the operation of chain stores that provides automotive undercar repair and tire services. The company offers services for brake systems, steering and suspension systems, tires, exhaust systems and many vehicle maintenance services and certain locations specialize in providing commercial tire and maintenance services. It operates under the brand names:Monro Auto Service & Tire Centers; Tread Quarters Discount Tire Auto Service Centers; Mr. Tire Auto Service Centers; Autotire Car Care Centers; Tire Warehouse Tires for Less; Tire Barn Warehouse; Ken Towery's Tire & Auto Care; Tire Choice Auto Service Centers; FreeService Tire and Car-X Tire & Auto. The company was founded by Charles J. August in 1957 and is headquartered in Rochester, NY.

Publicly traded companies mentioned herein: Amazon.com (AMZN), Monro (MNRO)

Highlights

The presenter is short shares of Monro (MNRO), an automotive repair and maintenance company that has 1251 stores as of the end of Q1 FY2020 (June 29, 2019) with ~$2.9B market cap, $573M net debt, and ~$3.5B EV. The stock is currently trading at ~$85, which is ~32x FY20 earnings. In his opinion, MNRO continues to face increasing competition in the space, and pressures on their business model driven by online tire distribution; he also sees red flags due to its aggressive accounting practices. He conservatively expects the company’s FY2020 earnings estimates of $2.65 to miss by 10-15% and sees the multiple contracting to 15x - 20x. Conservatively using the 20x multiple, he reaches at a price target of $46, representing 45% downside.

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