SP vs. MNRO: Which Stock Is the Better Value Option?
Investors interested in stocks from the Consumer Services - Miscellaneous sector have probably already heard of SP Plus (SP) and Monro Muffler Brake (MNRO). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Currently, SP Plus has a Zacks Rank of #2 (Buy), while Monro Muffler Brake has a Zacks Rank of #3 (Hold). 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 only part of the picture for value investors.
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.
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 13.72, while MNRO has a forward P/E of 28.81. We also note that SP has a PEG ratio of 1.37. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MNRO currently has a PEG ratio of 2.22.
Another notable valuation metric for SP is its P/B ratio of 2.22. 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 3.52.
These metrics, and several others, help SP earn a Value grade of A, 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.
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