SP vs. MNRO: Which Stock Should Value Investors Buy Now?
Investors interested in Consumer Services - Miscellaneous stocks are likely familiar with SP Plus (SP) and Monro Muffler Brake (MNRO). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
SP Plus and Monro Muffler Brake are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that SP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 13.19, while MNRO has a forward P/E of 32.94. We also note that SP has a PEG ratio of 1.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MNRO currently has a PEG ratio of 2.64.
Another notable valuation metric for SP is its P/B ratio of 2.12. 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 4.21.
These metrics, and several others, help SP earn a Value grade of B, while MNRO has been given a Value grade of D.
SP has seen stronger estimate revision activity and sports more attractive valuation metrics than MNRO, so it seems like value investors will conclude that SP is the superior option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.