Is Monro, Inc. overvalued or undervalued?

As of 28 May 2025, the valuation grade for Monro, Inc. has moved from expensive to risky, indicating a shift in perception regarding its market value. The company appears to be overvalued, given its P/E ratio of 27, which is significantly higher than the industry average. Additionally, the EV to EBITDA ratio stands at 6.50, while the EV to Capital Employed is 0.96, suggesting inefficiencies in capital utilization.
In comparison to its peers, Monro, Inc. has a higher P/E ratio than ChargePoint Holdings, Inc. and Leslie's, Inc., which are both in a similar valuation category. ChargePoint has a P/E of -1.22 and Leslie's has a P/E of -2.47, indicating that Monro's valuation may not be justified given its financial performance. Furthermore, Monro's return on equity (ROE) is only 3.46%, which raises concerns about its profitability relative to its equity base. Recent stock performance shows Monro underperforming against the S&P 500, with a year-to-date decline of 40.56% compared to the index's modest gain of 2.44%.