Intrinsic value of Monro, Inc. - MNRO

Previous Close

$76.33

  Intrinsic Value

$35.58

stock screener

  Rating & Target

str. sell

-53%

Previous close

$76.33

 
Intrinsic value

$35.58

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of MNRO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  1,224
  1,324
  1,427
  1,535
  1,647
  1,764
  1,885
  2,010
  2,141
  2,277
  2,419
  2,566
  2,720
  2,880
  3,047
  3,222
  3,404
  3,594
  3,792
  4,000
  4,217
  4,444
  4,681
  4,930
  5,190
  5,463
  5,748
  6,047
  6,361
  6,689
Variable operating expenses, $m
  1,079
  1,163
  1,249
  1,339
  1,433
  1,530
  1,631
  1,736
  1,846
  1,959
  2,020
  2,144
  2,272
  2,406
  2,545
  2,691
  2,843
  3,002
  3,168
  3,341
  3,522
  3,712
  3,910
  4,118
  4,335
  4,563
  4,801
  5,051
  5,313
  5,587
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,079
  1,163
  1,249
  1,339
  1,433
  1,530
  1,631
  1,736
  1,846
  1,959
  2,020
  2,144
  2,272
  2,406
  2,545
  2,691
  2,843
  3,002
  3,168
  3,341
  3,522
  3,712
  3,910
  4,118
  4,335
  4,563
  4,801
  5,051
  5,313
  5,587
Operating income, $m
  144
  161
  178
  196
  214
  233
  253
  274
  295
  318
  398
  423
  448
  474
  502
  531
  561
  592
  625
  659
  695
  732
  771
  812
  855
  900
  947
  996
  1,048
  1,102
EBITDA, $m
  239
  259
  279
  300
  322
  345
  369
  393
  419
  446
  473
  502
  532
  564
  596
  630
  666
  703
  742
  783
  825
  870
  916
  965
  1,016
  1,069
  1,125
  1,183
  1,245
  1,309
Interest expense (income), $m
  21
  24
  27
  30
  33
  36
  40
  44
  47
  51
  55
  60
  64
  69
  74
  79
  84
  89
  95
  101
  107
  114
  120
  128
  135
  143
  151
  160
  169
  178
  188
Earnings before tax, $m
  121
  134
  148
  163
  178
  193
  210
  227
  244
  262
  339
  359
  379
  401
  423
  447
  471
  497
  524
  552
  581
  611
  643
  677
  712
  749
  787
  827
  870
  914
Tax expense, $m
  33
  36
  40
  44
  48
  52
  57
  61
  66
  71
  91
  97
  102
  108
  114
  121
  127
  134
  141
  149
  157
  165
  174
  183
  192
  202
  213
  223
  235
  247
Net income, $m
  88
  98
  108
  119
  130
  141
  153
  165
  178
  192
  247
  262
  277
  293
  309
  326
  344
  363
  382
  403
  424
  446
  470
  494
  520
  547
  575
  604
  635
  667

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,322
  1,429
  1,541
  1,658
  1,779
  1,904
  2,035
  2,171
  2,312
  2,459
  2,612
  2,771
  2,937
  3,110
  3,291
  3,479
  3,676
  3,881
  4,095
  4,319
  4,554
  4,799
  5,055
  5,324
  5,605
  5,899
  6,207
  6,530
  6,869
  7,224
Adjusted assets (=assets-cash), $m
  1,322
  1,429
  1,541
  1,658
  1,779
  1,904
  2,035
  2,171
  2,312
  2,459
  2,612
  2,771
  2,937
  3,110
  3,291
  3,479
  3,676
  3,881
  4,095
  4,319
  4,554
  4,799
  5,055
  5,324
  5,605
  5,899
  6,207
  6,530
  6,869
  7,224
Revenue / Adjusted assets
  0.926
  0.927
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
  0.926
Average production assets, $m
  747
  807
  871
  936
  1,005
  1,076
  1,150
  1,226
  1,306
  1,389
  1,475
  1,565
  1,659
  1,757
  1,859
  1,965
  2,076
  2,192
  2,313
  2,440
  2,572
  2,711
  2,856
  3,007
  3,166
  3,332
  3,506
  3,689
  3,880
  4,080
Working capital, $m
  33
  36
  39
  41
  44
  48
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
  140
  147
  155
  163
  172
  181
Total debt, $m
  444
  496
  550
  607
  665
  726
  789
  855
  923
  995
  1,069
  1,146
  1,226
  1,310
  1,397
  1,488
  1,583
  1,683
  1,786
  1,895
  2,008
  2,127
  2,251
  2,381
  2,517
  2,659
  2,809
  2,965
  3,129
  3,301
Total liabilities, $m
  640
  692
  746
  802
  861
  922
  985
  1,051
  1,119
  1,190
  1,264
  1,341
  1,422
  1,505
  1,593
  1,684
  1,779
  1,878
  1,982
  2,091
  2,204
  2,323
  2,447
  2,577
  2,713
  2,855
  3,004
  3,161
  3,325
  3,496
Total equity, $m
  682
  738
  795
  855
  918
  983
  1,050
  1,120
  1,193
  1,269
  1,348
  1,430
  1,516
  1,605
  1,698
  1,795
  1,897
  2,002
  2,113
  2,229
  2,350
  2,476
  2,609
  2,747
  2,892
  3,044
  3,203
  3,370
  3,544
  3,727
Total liabilities and equity, $m
  1,322
  1,430
  1,541
  1,657
  1,779
  1,905
  2,035
  2,171
  2,312
  2,459
  2,612
  2,771
  2,938
  3,110
  3,291
  3,479
  3,676
  3,880
  4,095
  4,320
  4,554
  4,799
  5,056
  5,324
  5,605
  5,899
  6,207
  6,531
  6,869
  7,223
Debt-to-equity ratio
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
  0.850
  0.850
  0.850
  0.860
  0.860
  0.870
  0.870
  0.870
  0.880
  0.880
  0.880
  0.890
Adjusted equity ratio
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516
  0.516

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  88
  98
  108
  119
  130
  141
  153
  165
  178
  192
  247
  262
  277
  293
  309
  326
  344
  363
  382
  403
  424
  446
  470
  494
  520
  547
  575
  604
  635
  667
Depreciation, amort., depletion, $m
  95
  98
  101
  105
  108
  112
  116
  119
  123
  128
  75
  79
  84
  89
  94
  100
  105
  111
  117
  124
  131
  138
  145
  153
  161
  169
  178
  187
  197
  207
Funds from operations, $m
  183
  196
  210
  223
  238
  253
  269
  285
  302
  319
  322
  341
  361
  382
  403
  426
  449
  474
  500
  527
  555
  584
  615
  647
  680
  716
  753
  791
  832
  874
Change in working capital, $m
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  181
  193
  207
  221
  235
  250
  265
  281
  298
  316
  318
  337
  357
  377
  399
  421
  445
  469
  494
  521
  549
  578
  608
  640
  673
  708
  745
  783
  823
  865
Maintenance CAPEX, $m
  -35
  -38
  -41
  -44
  -48
  -51
  -55
  -58
  -62
  -66
  -71
  -75
  -79
  -84
  -89
  -94
  -100
  -105
  -111
  -117
  -124
  -131
  -138
  -145
  -153
  -161
  -169
  -178
  -187
  -197
New CAPEX, $m
  -59
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -127
  -132
  -138
  -145
  -152
  -159
  -166
  -174
  -182
  -191
  -200
Cash from investing activities, $m
  -94
  -99
  -104
  -110
  -116
  -122
  -129
  -135
  -142
  -149
  -157
  -165
  -173
  -182
  -191
  -200
  -211
  -221
  -232
  -244
  -256
  -269
  -283
  -297
  -312
  -327
  -343
  -360
  -378
  -397
Free cash flow, $m
  87
  95
  102
  111
  119
  128
  137
  146
  156
  166
  161
  172
  184
  196
  208
  221
  234
  248
  262
  277
  292
  309
  326
  343
  362
  381
  402
  423
  445
  468
Issuance/(repayment) of debt, $m
  50
  52
  54
  56
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  119
  124
  130
  136
  142
  149
  156
  164
  172
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  50
  52
  54
  56
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  119
  124
  130
  136
  142
  149
  156
  164
  172
Total cash flow (excl. dividends), $m
  137
  147
  157
  167
  178
  189
  200
  212
  225
  237
  235
  249
  264
  279
  295
  312
  329
  347
  366
  385
  406
  427
  450
  473
  498
  524
  551
  579
  609
  640
Retained Cash Flow (-), $m
  -54
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -106
  -111
  -116
  -121
  -126
  -132
  -139
  -145
  -152
  -159
  -167
  -175
  -183
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  83
  91
  99
  107
  115
  124
  133
  142
  152
  162
  157
  167
  178
  190
  202
  214
  227
  241
  255
  270
  285
  301
  318
  335
  353
  372
  392
  412
  434
  457
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  78
  81
  82
  82
  81
  80
  77
  74
  71
  66
  56
  52
  47
  42
  38
  33
  28
  24
  20
  16
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Monro, Inc., formerly Monro Muffler Brake, Inc., is engaged in the provision of automotive undercar repair and tire services in the United States. The Company provides a range of services on passenger cars, light trucks and vans for brakes; mufflers and exhaust systems, and steering, drive train, suspension and wheel alignment. It also offers tires and routine maintenance services, which include state inspections. It offers repair and replacement of parts. Its store provides a range of undercar repair services for brakes, steering, mufflers and exhaust systems, suspension and wheel alignment, as well as tire replacement and service. It also offers scheduled maintenance services in its stores where services are packaged and offered to consumers based upon the year, make, model and mileage of each specific vehicle. Its maintenance services include oil change services, heating and cooling system flush and fill service, fuel system service and a transmission flush and fill service.

FINANCIAL RATIOS  of  Monro, Inc. (MNRO)

Valuation Ratios
P/E Ratio 40.2
Price to Sales 2.4
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 19.2
Price to Free Cash Flow 26.3
Growth Rates
Sales Growth Rate 8.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.4%
Cap. Spend. - 3 Yr. Gr. Rate 1.8%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 68.2%
Total Debt to Equity 70.7%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 7.8%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.2%
Return On Equity 11.1%
Return On Equity - 3 Yr. Avg. 12.8%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 38.8%
Gross Margin - 3 Yr. Avg. 39.7%
EBITDA Margin 15.9%
EBITDA Margin - 3 Yr. Avg. 16.4%
Operating Margin 11.4%
Oper. Margin - 3 Yr. Avg. 12.2%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 10.6%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 6.7%
Effective Tax Rate 36.1%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 37.1%

MNRO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MNRO stock intrinsic value calculation we used $1128 million for the last fiscal year's total revenue generated by Monro, Inc.. The default revenue input number comes from 0001 income statement of Monro, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MNRO stock valuation model: a) initial revenue growth rate of 8.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6%, whose default value for MNRO is calculated based on our internal credit rating of Monro, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Monro, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MNRO stock the variable cost ratio is equal to 88.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MNRO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6% for Monro, Inc..

Corporate tax rate of 27% is the nominal tax rate for Monro, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MNRO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MNRO are equal to 61%.

Life of production assets of 19.7 years is the average useful life of capital assets used in Monro, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MNRO is equal to 2.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $628.476 million for Monro, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 33.055 million for Monro, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Monro, Inc. at the current share price and the inputted number of shares is $2.5 billion.

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