Why Monro Muffler Shares Crashed


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 auto-repair-services specialist Monro Muffler Brake (NAS: MNRO) sank as much as 12% today after its quarterly results and guidance disappointed Wall Street.

So what: Monro's fourth-quarter profit didn't miss by much, but paltry same-store sales -- an increase of just 0.7% versus Wall Street's expectation of 1% to 4% -- coupled with a weak first-quarter outlook reinforce concerns about its growth prospects going forward. Management said that cautious customers continue to defer auto-repair spending amid higher gas prices and the uncertain economy, suggesting that things aren't about to pick up anytime soon.

Now what: For the current quarter, management now sees EPS of $0.35 to $0.40 -- well below the consensus of $0.55 -- and expects same-store sales to fall 5% to 7%. "As we look forward, we continue to have a positive long-term outlook for our industry and company," Chairman and CEO Robert Gross said, "though we are more cautious near-term as we believe that higher gas prices and the macroeconomic environment will continue to weigh on consumer sentiment and purchasing behavior." With the stock now off about 30% from its 52-week highs, however, Mr. Market seems to be baking much of the bad news into the price.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies 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 Fool's disclosure policy always gets a perfect score.

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