NEW YORK ( TheStreet) -- Monro Muffler/Brake (Nasdaq: MNRO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- MNRO's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MONRO MUFFLER BRAKE INC has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MONRO MUFFLER BRAKE INC increased its bottom line by earning $1.69 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.69).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 27.3% when compared to the same quarter one year prior, rising from $8.25 million to $10.50 million.
- Net operating cash flow has slightly increased to $11.58 million or 7.39% when compared to the same quarter last year. In addition, MONRO MUFFLER BRAKE INC has also modestly surpassed the industry average cash flow growth rate of 1.43%.
- Although MNRO's debt-to-equity ratio of 0.17 is very low, it is currently higher than that of the industry average. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.16 is very weak and demonstrates a lack of ability to pay short-term obligations.
-- Written by a member of TheStreet Ratings Staff