What Happened?
Shares of auto services provider Monro (NASDAQ: MNRO) jumped 5.9% in the afternoon session after the company declared a quarterly cash dividend and management outlined its strategic direction at an investor conference. The Board of Directors announced a quarterly cash dividend of $.28 per share. In addition to the dividend news, the company's CEO and CFO spoke at the Stephens Annual Investment Conference. During the discussion, they detailed efforts to improve performance, which included closing 145 underperforming stores. Management also noted that gross margins improved in the second quarter and that inventory levels were reduced by $21 million, signaling a focus on greater efficiency.
The shares closed the day at $18.18, up 6.8% from previous close.
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What Is The Market Telling Us
Monro’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 15.1% on the news that a report revealed that activist investor Carl Icahn acquired a significant stake in the company. The Icahn Group reported it purchased 639,473 shares at a price of $15.19 each, for a total of about $9.7 million. Following the transaction, Icahn's total disclosed ownership reached 4.4 million shares, which represented nearly a 15% stake in the automotive service and tire company. The involvement of a well-known activist investor often signaled to the market that strategic changes could be on the horizon. This news came after a period where Monro's performance had been challenged, as its previous quarter was marked by results that missed revenue expectations due to store closures and softer consumer demand.
Monro is down 25.9% since the beginning of the year, and at $18.18 per share, it is trading 35.9% below its 52-week high of $28.34 from December 2024. Investors who bought $1,000 worth of Monro’s shares 5 years ago would now be looking at an investment worth $419.47.
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