Nasdaq:MNRO
MONRO, INC.
Monro provides tires, wheel alignment, and vehicle maintenance services through a vast network of over 1,700 retail locations in the US and Canada.
Key Metrics
Investment Thesis
Bull Case
Monro offers an attractive turnaround opportunity for value investors who believe consumer demand for essential vehicle maintenance will rebound as economic conditions stabilize. The company's massive network provides a durable competitive moat that allows it to capture market share from competitors during periods of high inflation when customers seek trusted local providers. Positive operating cash flow of $131.9M indicates underlying business health and the ability to fund growth or pay down debt despite recent earnings volatility.
Bear Case
Investors should be wary of the deteriorating profitability trend, with net income dropping from $37.6M in 2024 to a loss of $5.2M in 2025, signaling potential structural issues or pricing pressure. The massive cash outflow from financing activities of $116.5M and significant inventory buildup suggest the company may be struggling with capital allocation or demand forecasting. High leverage relative to current assets and a large retained earnings deficit pose risks if revenue growth does not accelerate quickly.
About MONRO, INC.
Monro, Inc. (MNRO) is a leading automotive aftermarket retailer operating over 1,700 locations across the United States and Canada, specializing in tire sales, wheel alignment services, and comprehensive vehicle maintenance solutions. The company serves individual consumers, fleet operators, and dealership networks with a focus on delivering trusted service experiences and high-margin aftermarket products. With a diversified portfolio of physical locations, Monro maintains a strong presence in both urban and rural markets to capture recurring service revenue.
Analysis
Management Discussion
Despite generating robust cash flow from operations of $131.9M, the company reported a net loss of $5.2M for 2025, driven by a decline in revenue from $1.33B in 2023 to $1.20B in 2025. The financials show a substantial increase in inventory levels of $27.0M and a significant reduction in accounts payable, suggesting aggressive stockpiling or working capital adjustments amidst slowing sales velocity. Management must address the widening gap between operating profit and net income to restore shareholder value after the shift from profitability in 2024.
Industry Overview
The automotive aftermarket industry is highly competitive, characterized by low barriers to entry but high operational complexity due to labor-intensive service requirements. Success in this sector relies heavily on location density, inventory turnover efficiency, and the ability to offer bundled services that increase average transaction values. Margins are typically thin, requiring volume growth or cost control measures to sustain profitability in a price-sensitive consumer environment.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $1.33B | $1.28B | $1.20B |
| Cost of Revenue | $869.2M | $824.7M | $777.7M |
| Gross Profit | $456.2M | $452.1M | $417.6M |
| Operating Expenses | $376.4M | $380.7M | $405.1M |
| Operating Income | $79.8M | $71.4M | $12.6M |
| Stock-Based Comp | $5.7M | $4.3M | $4.7M |
| Depreciation | $40.9M | $38.8M | $36.5M |
| Amortization | $3.7M | $3.3M | $2.9M |
| Non-Operating Income | $-22.6M | $-19.5M | $-18.5M |
| Pre-Tax Income | $57.2M | $51.9M | $-5.9M |
| Income Tax | $18.1M | $14.3M | $-731.0K |
| Continuing Ops | $39.0M | $37.6M | $-5.2M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $39.0M | $37.6M | $-5.2M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $39.0M | $37.6M | $-5.2M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $258.5M | $253.3M | $277.4M |
| Cash & Equivalents | $4.9M | $6.6M | $20.8M |
| Inventory | $147.4M | $154.1M | $181.5M |
| Prepaid Expenses | $92.9M | $80.9M | $59.4M |
| Other Current Assets | $13.3M | $11.7M | $15.7M |
| Long-Term Assets | $1.52B | $1.44B | $1.36B |
| PP&E (Net) | $305.0M | $280.2M | $258.9M |
| Goodwill | $736.5M | $736.4M | $736.4M |
| Operating Leases | $211.1M | $202.7M | $181.6M |
| Other LT Assets | $265.9M | $220.2M | $187.5M |
| Total Assets | $1.78B | $1.69B | $1.64B |
| Current Liabilities | $449.2M | $455.2M | $524.3M |
| Accounts Payable | $261.7M | $251.9M | $322.6M |
| Current Leases | $37.5M | $39.4M | $40.1M |
| Deferred Revenue | $15.4M | $15.2M | $14.7M |
| Taxes Payable | $541.0K | $880.0K | — |
| Other Current Liab | $134.0M | $147.7M | $146.9M |
| Long-Term Liabilities | $632.8M | $580.9M | $496.8M |
| Long-Term Debt | $105.0M | $102.0M | $61.2M |
| LT Operating Leases | $191.1M | $181.9M | $167.5M |
| Other LT Liab | $329.7M | $290.5M | $261.7M |
| Total Liabilities | $1.08B | $1.04B | $1.02B |
| Shareholders' Equity | $694.9M | $656.8M | $620.8M |
| Paid-In Capital | $250.7M | $254.5M | $258.8M |
| Retained Earnings | $653.6M | $655.4M | $615.1M |
| AOCI | $-4.1M | $-3.5M | $-3.4M |
| Treasury Stock | $205.6M | $250.1M | $250.1M |
| Total L&E | $1.78B | $1.69B | $1.64B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $39.0M | $37.6M | $-5.2M |
| Non-Cash Adjustments | $62.7M | $125.0M | $99.0M |
| Working Capital Changes | $113.3M | $-37.4M | $38.1M |
| Cash from Operations | $215.0M | $125.2M | $131.9M |
| Capital Expenditures | $39.0M | $25.5M | $26.4M |
| Cash from Investing | $26.5M | $-2.0M | $-1.2M |
| Share Buybacks | $96.9M | $44.0M | — |
| Dividends Paid | $36.4M | $35.5M | $34.9M |
| Cash from Financing | $-244.6M | $-121.6M | $-116.5M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-3.1M | $1.7M | $14.2M |
| Beginning Cash | $7.9M | $4.9M | $6.6M |
| Ending Cash | $4.9M | $6.6M | $20.8M |
Frequently Asked Questions
How does MONRO, INC. make money?
The company's revenue is primarily driven by its core tire and wheel business, which accounts for the majority of the $1.20B annual sales. Significant segments include general automotive care services such as brake repair, oil changes, and battery replacement that generate recurring cash flow. Fleet operations and dealership services represent another key revenue stream, providing B2B stability alongside B2C retail traffic.
What are the main risks for MNRO?
A primary risk is extreme sensitivity to consumer discretionary spending, as economic downturns can lead to customers delaying non-essential tire replacements and maintenance services. Rising costs for raw materials like rubber and steel, along with increased labor expenses, could compress the already thin operating margins seen in recent data. The company faces significant competition from national chains and discount retailers that may price products lower or offer more bundled service packages.
What is MNRO's competitive advantage?
Monro benefits from an extensive real estate footprint with over 1,700 locations, creating high barriers to entry for new competitors and ensuring consistent market coverage. The company's proprietary technology platform enables efficient scheduling and inventory management across its vast network, driving superior operational leverage. Strong brand recognition in the independent tire and wheel repair sector fosters high customer loyalty and repeat business.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.