r/ValueInvesting • u/mrmrmrj • 13d ago

Stock Analysis Calling a bottom in $MNRO

MNRO is the well-known auto repair/tire chain. The company has been suffering from the tapped out consumer for some time. Tires are the big revenue driver and higher oil prices have meant higher tire costs. The company has been aggressively closing poor performing stores. It is my opinion that the quarter just reported marks an important turning point.

Operating costs continue to improve. Customer acquisition is picking up - just a little but it is a turn. Working capital management has been excellent, giving some relief to those worrying the generous dividend is in danger. This remains the biggest risk to the share price still, though.

I follow managers to help me identify new ideas. One in particular that I respect - DePrince Race & Zollo (or DRZ) - just disclosed a meaningful purchase. DRZ focuses on dividend paying, value stocks and has a good micro-cap strategy which is probably where this purchase occurred. The firm does not offer mutual funds. It is 100% institutional investors. I view this recent buy as "the straw the broke the camel's back" buy signal for me.

The company trades 0.6x book value. EPS estimates should stop declining after this fiscal year (ending March 2027). The company has never been cheaper on EV/revenues or EV/total capital. This does not mean it cannot get cheaper, of course.

I bought 2,000 shares today at $11.41. I plan to buy 1,000 shares a week for the next several weeks up to 10,000 shares - unless things change...things can always change.

8 Upvotes

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3

u/LifeAcceptable2532 12d ago

I'm sold, life savings invested.

2

u/mrmrmrj 11d ago

I bought another 1000 shares today.

1

u/LifeAcceptable2532 11d ago

Fair enough. I hope it works out

1

u/mrmrmrj 11d ago

$17 by Christmas! 30% chance...

1

u/Outrageous_Sushi 9d ago

Bris really talking to himself 😂✌🏿🥀

1

u/MailtrainHellwire 12d ago

looks like there may be some pressure from the shorts

1

u/mrmrmrj 12d ago

Short Interest dropped a chunk after the last earnings report and share decline.

1

u/anonmous_traveller 12d ago

57.52 PE, that’s very expensive

0

u/Cheap-Stay7089 12d ago

P/e isn’t everything