What Happened?
Shares of auto services provider Monro (NASDAQ: MNRO) fell 5.5% in the afternoon session after the stock's slide continued as it reported a 4.1% drop in quarterly sales and received a lower price target from a Wells Fargo analyst.
The automotive service company's revenue fell to $288.9 million, missing analysts' expectations. This decline was mainly driven by the closure of 145 underperforming stores. Monro also pointed to recent softness in consumer demand, which was reflected in preliminary October comparable store sales that were down 2%.
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What Is The Market Telling Us
Monro’s shares are very volatile and have had 25 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 2 days ago when the stock dropped 16.7% on the news that the company reported third-quarter results that missed revenue expectations and pointed to a weak outlook. Although Monro's adjusted earnings of $0.21 per share beat analyst estimates, its revenue of $288.9 million fell short, dropping 4.1% from the same period last year. The company noted the decline was partly due to the closure of 156 underperforming stores over the past year. While comparable store sales for the reported quarter rose 1.1%, what likely worried investors was management's commentary on current trends. Monro highlighted a "recent softness in consumer demand," revealing that preliminary comparable store sales for October were down 2%. Adding to the uncertainty, the company did not provide specific financial guidance for the upcoming fiscal year.
Monro is down 41.3% since the beginning of the year, and at $14.41 per share, it is trading 51.6% below its 52-week high of $29.78 from November 2024. Investors who bought $1,000 worth of Monro’s shares 5 years ago would now be looking at an investment worth $349.59.
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