Why Monro Muffler Brake Shares Shot Up

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Monro Muffler Brake were accelerating higher today, gaining as much as 13% after posting a strong earnings report.

So what: The auto repair service delivered earnings per share of $0.25 in line with estimates, while revenues jumped 14.1% to $195.9 million, beating the expert view of $190.4 million. Despite the increase in overall sales, same-store sales, seen as a better measure of organic growth, fell 5.6% after adjusting for an increase in calendar days. However, that was still better than the company's projection of -6% to -9%. EPS guidance for the current quarter was also below estimates as Monro expects $0.42-$0.46, worse than the consensus at $0.48. Management noted "the continued impact of the challenging economic environment" as part of the reason for the underwhelming projection.


Now what: The jump in Monro shares seems to have come mostly from low expectations as the revenue beat was mostly due to an acquisition that contributed more than 20% of total sales.  Shareholders may have also liked the announced 10% dividend increase, boosting the yield slightly to 0.95%. Management also said it saw an improvement in comparable sales after January once the weather improved, and expects comparable sales growth of 3-4% in the current quarter so the company appears to be moving in the right direction once again.

Want more on Monro? Add the company to your Watchlist by clicking right here.

The article Why Monro Muffler Brake Shares Shot Up originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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