Why Monroe Stock Might Still Be a Sell

MNRO shareholders can expect dividend payments on September 6

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Monro, Inc. (NASDAQ:MNRO) is an auto service and tire provider in the United States that operates more than 1,300 stores and 9,000 service bays nationwide. MNRO also has 79 franchised locations and two retread facilities in 32 states. The company's brand portfolio features 10 brands, the majority offering complete auto care and service. At last glance, MNRO is trading up 0.8% at $46.61.

On Aug. 19, Monro announced a quarterly cash dividend of $0.28 per share on the company’s outstanding shares of common stock, offering a dividend yield of 2.42% at a forward dividend of $1.12. MNRO's dividend is payable on Sept. 6 to shareholders as of August 23.

As far as price action goes, Monro stock has decreased about 19% in price over the past 12 months and is currently trading down 27% since peaking at a 52-week high of $64.71 last November. Additionally, shares of MNRO have dropped in price 21% year-to-date and have seen a 9% decline over the past month. However, Monro stock has recovered 24% since bottoming at a two-year low of $37.49 in May.

The auto service and tire company possesses some generally weak fundamentals. To begin, Monro stock trades rich at an inflated forward price-earnings ratio of 26.25 and a price-sales ratio of 1.16. Moreover, the company holds $30.65 million in cash and $715.59 million in total debt on its balance sheet, making Monro stock’s risk-reward potential extremely unattractive for both long- and short-term investors.

However, its worth noting that options are very affordable at the moment, per MNRO's Schaeffer's Volatility Index (SVI) of 42% that sits in the relatively low 20th percentile of its annual range. This indicates options traders are pricing in extremely low volatility expectations

 

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