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Monro, Inc.'s (NASDAQ:MNRO) Shares Climb 26% But Its Business Is Yet to Catch Up

Simply Wall St · 2d ago

Monro, Inc. (NASDAQ:MNRO) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 28% in the last twelve months.

In spite of the firm bounce in price, there still wouldn't be many who think Monro's price-to-sales (or "P/S") ratio of 0.5x is worth a mention when it essentially matches the median P/S in the United States' Specialty Retail industry. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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See our latest analysis for Monro

ps-multiple-vs-industry
NasdaqGS:MNRO Price to Sales Ratio vs Industry December 5th 2025

How Monro Has Been Performing

While the industry has experienced revenue growth lately, Monro's revenue has gone into reverse gear, which is not great. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Monro will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Monro?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Monro's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 2.6% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 12% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to slump, contracting by 0.1% during the coming year according to the five analysts following the company. Meanwhile, the broader industry is forecast to expand by 7.5%, which paints a poor picture.

With this information, we find it concerning that Monro is trading at a fairly similar P/S compared to the industry. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. Only the boldest would assume these prices are sustainable as these declining revenues are likely to weigh on the share price eventually.

The Bottom Line On Monro's P/S

Monro appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

While Monro's P/S isn't anything out of the ordinary for companies in the industry, we didn't expect it given forecasts of revenue decline. When we see a gloomy outlook like this, our immediate thoughts are that the share price is at risk of declining, negatively impacting P/S. If we consider the revenue outlook, the P/S seems to indicate that potential investors may be paying a premium for the stock.

Before you settle on your opinion, we've discovered 1 warning sign for Monro that you should be aware of.

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