MNRO

Monro Inc

Consumer, Industrial/Transportation


Presented:06/19/2018
Price:$61.05
Cap:$2.04B
Current Price:$27.28
Cap:$0.82B

Presented

Date06/19/2018
Price$61.05
Market Cap$2.04B
Ent Value$2.18B
P/E Ratio31.8x
Book Value$19.14
Div Yield1.31%
Shares O/S33.42M
Ave Daily Vol330,305
Short IntN/A

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 Muffler Brake & Service, Tread Quarters Discount Tire, Mr. Tire, Autotire Car Care Center, Tire Warehouse, Tire Barn Warehouse, Ken Towery's Tire & Auto Care, The Tire Choice, Car-X, and McGee Tire. The company was founded by Charles J. August in 1957 and is headquartered in Rochester, NY.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Cooper tire & Rubber Co (CTB), Monro Inc (MNRO), Sears Holdings Corp (SHLD) 

Highlights

The presenter is short the stock at $61 and sees the long-term risk/reward skewed in bears’ favor. While the market remains fragmented and the company has grown via acquisitions, it has also become increasingly reliant on tire sales (versus parts and services in past years). As a result, MNRO faces several underappreciated headwinds (both secular and company-specific). With increasing competition, including heightened Amazon risk, and overly optimistic Street estimates, a turnaround under new CEO Brett Ponton seems unlikely. In his view, FCF may be meaningfully overstated, and earnings could fall short of the consensus $2.70 2020 EPS estimate (3/31 fiscal year end). If this scenario plays out, he estimates 35% downside for the stock.

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Idea Discussion

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