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SP vs. MNRO: Which Stock Is the Better Value Option?

Zacks Equity Research

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 is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

SP Plus and Monro Muffler Brake are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

SP currently has a forward P/E ratio of 13.72, while MNRO has a forward P/E of 29.63. We also note that SP has a PEG ratio of 1.37. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MNRO currently has a PEG ratio of 2.28.

Another notable valuation metric for SP is its P/B ratio of 2.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MNRO has a P/B of 3.63.

These are just a few of the metrics contributing to SP's Value grade of A and MNRO's Value grade of C.

Both SP and MNRO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SP is the superior value option right now.


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SP Plus Corporation (SP) : Free Stock Analysis Report
 
Monro Muffler Brake, Inc. (MNRO) : Free Stock Analysis Report
 
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