Tuesday, Jefferies reduced the price target for Monro Muffler Brake Inc. (NASDAQ:MNRO) shares to $25 from $28, while maintaining a Hold rating.
The adjustment follows Monro's reported quarterly earnings, which showed a notable decline in comparable sales, particularly in tire units, and indicated ongoing top-line challenges.
The company's adjusted earnings per share (EPS) for the fourth quarter came in at $0.21, falling short of both the estimated $0.33 and consensus figures. The reported year-over-year comparable sales decrease of 7.2% starkly contrasted with the expected 0.0% estimation and the consensus of a 2.0% increase.
This significant drop was primarily due to declines in tire unit sales and a trend of consumers opting for lower-priced alternatives.
Looking ahead, Monro's preliminary figures suggest a 12% decline in comparable sales for the first quarter, signaling that the company's revenue difficulties are likely to persist. Despite heightened promotional efforts that may aid in a recovery, the risk of near-term underperformance remains.
This concern is amplified by broader market observations and third-party tire data, which suggest that Monro is not only losing market share but also facing the impact of consumer trade-down behaviors.
Jefferies' commentary on the situation highlighted the compounded effects of these challenges on Monro's short-term performance.
The firm's analysis points to a tough road ahead for the automotive service provider as it grapples with both market share erosion and changing consumer spending habits.
InvestingPro Insights
In light of the recent performance and market challenges faced by Monro Muffler Brake Inc. (NASDAQ:MNRO), real-time data and insights from InvestingPro provide a deeper look into the company's financial health and stock performance. Monro's market capitalization stands at $710.18M, and the stock is currently trading at a P/E ratio of 19.43, with a slightly lower adjusted P/E ratio for the last twelve months as of Q4 2024 at 18.95. Despite a decrease in revenue growth of -3.67% over the last twelve months, the company has maintained a gross profit margin of 35.41%.
InvestingPro Tips suggest that Monro's management has been actively engaged in share buybacks, and the company has a history of raising its dividend, having done so for 10 consecutive years. Additionally, the stock's current status in oversold territory according to the RSI may be of interest to potential investors. Notably, Monro has maintained dividend payments for 20 consecutive years, which is a testament to its commitment to shareholder returns, even amidst market fluctuations. For more in-depth analysis and tips, including the company's short-term liquidity concerns and recent stock performance trends, readers can explore additional insights on InvestingPro. There are 12 more InvestingPro Tips available for Monro, which can be accessed with a subscription. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24.
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