Insider Trades in Monro Muffler (MNRO)
Monro (MNRO) rare insider buy recently on 5/28 when the CEO and President Michael Broderick bought 10,000 shares at $62.25, a more than $622,000 investment. This is the largest buy in over four years. MNRO has traded up 16.5% in 2021 and currently basing in narrow range about 13% below new 52-week highs. Shares broke out of a long base earlier this year above $60 and now back-testing that range with a long-term measured move up to $85. The $2.1B company trades 27.16X earnings, 1.87X sales, and 20.25X FCF with a 1.45% yield. MNRO sees 16% revenue growth in 2022 with 77% growth in EPS up over $2/share. MNRO is a provider of undercar repair and tire services in the US on everything from mufflers, brakes and exhaust systems to alignment and tire replacement. MNRO has been executing on a growth strategy called “Monro Forward” which has seen them renovate stores to focus more on a tire-oriented brand while also streamlining key market operations. They’ve been expanding their footprint too with over 30 acquisitions of stores in the Western US and see plenty of opportunity left in the highly fragmented space. MNRO saw comps rebound in Q4 up 9.4% as demand continues to improve and they see a number of drivers this Summer for the consumer:
“The consumer has been well supported and continues to be well supported during this. The other probably more sustainable improvement that we continue to see is improvements in vehicle miles traveled. I think that will continue to improve, particularly in light of some of the CDC guidance that was recently released related to mask mandates. So I think that all of that is really positive, especially as vaccination continues to roll out. So we look at the vehicle miles travel trend as one that should continue to improve, and that’s the longer-term trend that will provide a nice backdrop for our business in addition to the aging vehicle cohort, obviously, elevated used car sales that we have seen is supportive of our sweet spot. So all of that, we think, really lines up well from a backdrop and for us to continue to execute our own initiatives to take advantage of that.”
Analysts have an average target for shares of $64 with a Street High $70 from BMO. The firm raising estimates on 5/21 citing the recent earnings beat and stronger than expected comp-store sales, along with its continued operating expense management. Comps have recovered faster than expected thanks to consumer stimulus, with tire sales reaching pre-pandemic levels and higher-margin service categories improving to pre-pandemic levels. Short interest is 7.3%. Hedge fund ownership fell 4.5%.