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SP vs. MNRO: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Consumer Services - Miscellaneous sector might want to consider either SP Plus (SP) or Monro Muffler Brake (MNRO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, SP Plus has a Zacks Rank of #2 (Buy), while Monro Muffler Brake has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SP has an improving earnings 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.

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 12.58, while MNRO has a forward P/E of 29.11. We also note that SP has a PEG ratio of 1.26. 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 2.24.

Another notable valuation metric for SP is its P/B ratio of 2.04. 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 3.56.

Based on these metrics and many more, SP holds a Value grade of A, while MNRO has a Value grade of C.

SP stands above MNRO thanks to its solid earnings outlook, and based on these valuation figures, we also 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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Zacks Investment Research