Head to Head Comparison: Monro Muffler Brake (MNRO) and Penske Automotive Group (PAG)

Monro Muffler Brake (NASDAQ: MNRO) and Penske Automotive Group (NYSE:PAG) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Institutional & Insider Ownership

39.3% of Penske Automotive Group shares are owned by institutional investors. 6.2% of Monro Muffler Brake shares are owned by insiders. Comparatively, 40.7% of Penske Automotive Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Monro Muffler Brake pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. Penske Automotive Group pays an annual dividend of $1.28 per share and has a dividend yield of 3.1%. Monro Muffler Brake pays out 38.3% of its earnings in the form of a dividend. Penske Automotive Group pays out 30.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Monro Muffler Brake has increased its dividend for 8 consecutive years and Penske Automotive Group has increased its dividend for 6 consecutive years. Penske Automotive Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Monro Muffler Brake has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares Monro Muffler Brake and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monro Muffler Brake 5.84% 10.90% 5.37%
Penske Automotive Group 1.75% 19.13% 3.92%

Earnings and Valuation

This table compares Monro Muffler Brake and Penske Automotive Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Monro Muffler Brake $1.06 billion 1.46 $165.49 million $1.88 24.73
Penske Automotive Group $20.50 billion 0.17 $679.00 million $4.19 9.75

Penske Automotive Group has higher revenue and earnings than Monro Muffler Brake. Penske Automotive Group is trading at a lower price-to-earnings ratio than Monro Muffler Brake, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Monro Muffler Brake and Penske Automotive Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monro Muffler Brake 0 4 4 0 2.50
Penske Automotive Group 1 2 3 0 2.33

Monro Muffler Brake currently has a consensus target price of $63.33, indicating a potential upside of 36.20%. Penske Automotive Group has a consensus target price of $53.20, indicating a potential upside of 30.23%. Given Monro Muffler Brake’s stronger consensus rating and higher possible upside, equities analysts plainly believe Monro Muffler Brake is more favorable than Penske Automotive Group.

Summary

Penske Automotive Group beats Monro Muffler Brake on 9 of the 17 factors compared between the two stocks.

About Monro Muffler Brake

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, belt installation, fuel system service and a transmission flush and fill service.

About Penske Automotive Group

Penske Automotive Group, Inc. is an international transportation services company. The Company operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services principally in Australia and New Zealand. The Company’s segments include Retail Automotive, consisting of its retail automotive dealership operations; Retail Commercial Truck, consisting of its retail commercial truck dealership operations in the United States and Canada; Other, consisting of its commercial vehicle and power systems distribution operations and other non-automotive consolidated operations, and Non-Automotive Investments, consisting of its equity method investments in non-automotive operations. The Company holds interests in Penske Truck Leasing Co., L.P. (PTL), a provider of transportation services and supply chain management.

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