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Valvoline Inc (VVV)
NYSE:VVV
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Valvoline
(NYSE:VVV)
Rating:71Outperform
Price Target:
$37.00
▲( 10.09% Upside)
Positive Factors
Earnings
Strong 2Q comps and a strong start to 3Q are positives, setting up a solid second half and increasing the likelihood of reaching the high-end of the annual growth range.
Growth Strategy
Valvoline Inc is seen as a fast-scaling pure-play quick lube market share grower with a strong top-line algorithm driven by normalized unit growth and consistent store growth.
Market Position
VVV's defensive characteristics are appreciated as the company is mostly insulated from tariffs and should be better positioned in a softer macro.
Negative Factors
Acquisition Impact
The acquisition has resulted in a pause of share buybacks, which could last over two years, aligning negatively with investor preference for a consistent and methodical approach to shrinking share count.
Investor Sentiment
Shares could remain rangebound in the near term despite a maintained positive bias and Buy rating.
Margins
Margins came in softer and will remain pressured, with adjusted EBITDA margin missing expectations and showing a year-over-year decline.
Valvoline (VVV) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.44B
Dividend YieldN/A
Average Volume (3M)1.79M
Price to Earnings (P/E)17.2
Beta (1Y)0.76
Revenue Growth9.56%
EPS Growth64.10%
CountryUS
Employees10,500
SectorEnergy
Sector Strength40
IndustryOil & Gas Refining & Marketing
Share Statistics
EPS (TTM)0.34
Shares Outstanding127,111,680
10 Day Avg. Volume2,056,889
30 Day Avg. Volume1,786,621
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)18.48
Price to Sales (P/S)0.00
P/FCF Ratio82.73
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.86Price Target Upside24.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Valvoline Business Overview & Revenue Model
Company DescriptionValvoline Inc. (VVV) is a leading global marketer and supplier of premium branded lubricants and automotive services. The company operates in the automotive services sector, focusing on quick-lube services and manufacturing lubricants for a variety of vehicles and engines. Valvoline is renowned for its high-quality motor oils, antifreeze products, and transmission fluids, serving both the commercial and consumer markets.
How the Company Makes MoneyValvoline makes money primarily through two key revenue streams: product sales and services. The product sales segment includes the manufacturing and distribution of high-performance lubricants and automotive chemicals under the Valvoline brand, which are sold to consumers, auto parts retailers, and professional installers. The services segment generates revenue through the operation of company-owned and franchised quick-lube centers under the Valvoline Instant Oil Change brand. These centers offer a comprehensive suite of preventive maintenance services, including oil changes, tire rotations, and fluid exchanges. Significant partnerships with automotive retailers and distributors, as well as a strong franchise network, contribute to Valvoline's earnings by expanding its market presence and customer reach.
Valvoline Financial Statement Overview
Summary
Valvoline demonstrates strong revenue growth and robust return on equity, but faces risks due to high leverage and modest free cash flow growth. The company must manage its debt levels to maintain financial stability.Income Statement
Valvoline shows a strong revenue growth trajectory with an increase from $1.44 billion in 2023 to $1.66 billion in TTM (Trailing-Twelve-Months). Gross profit margin is healthy at 38.36%, and net profit margin at 13.73% indicates solid profitability. However, the recent decline in EBITDA margin to 32.05% from 22.67% is concerning and needs monitoring.75
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 5.68, which poses a risk. Return on equity is robust at 99.15%, showcasing effective use of equity. The equity ratio of 9.78% indicates a heavy reliance on liabilities, which may affect long-term financial stability.60
Neutral
Cash Flow
Operating cash flow to net income ratio of 1.26 indicates efficient cash generation relative to net income. However, free cash flow growth is modest, with a recent figure of $50.7 million. The free cash flow to net income ratio at 0.22 suggests limited cash available after capital expenditures.68
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.66B | 1.62B | 1.44B | 1.24B | 1.04B | 727.00M | Gross Profit |
| 636.90M | 618.80M | 544.50M | 476.40M | 432.30M | 301.00M | EBIT |
| 448.20M | 367.20M | 247.20M | 220.30M | 240.10M | 160.20M | EBITDA |
| 560.90M | 367.20M | 363.60M | 284.70M | 430.40M | 591.00M | Net Income Common Stockholders |
| 227.80M | 211.50M | 1.42B | 424.30M | 420.30M | 316.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 60.00M | 68.30M | 756.60M | 23.40M | 122.60M | 760.00M | Total Assets |
| 2.35B | 2.44B | 2.89B | 3.42B | 3.19B | 3.05B | Total Debt |
| 1.31B | 1.37B | 1.83B | 1.92B | 1.86B | 2.19B | Net Debt |
| 1.25B | 1.31B | 1.42B | 1.89B | 1.74B | 1.43B | Total Liabilities |
| 2.12B | 2.25B | 2.69B | 3.11B | 3.06B | 3.13B | Stockholders Equity |
| 229.80M | 185.60M | 203.20M | 306.60M | 134.50M | -76.00M |
| Cash Flow | Free Cash Flow | ||||
| 50.70M | 40.70M | -221.30M | 152.20M | 300.80M | 277.70M | Operating Cash Flow |
| 286.40M | 265.10M | -40.80M | 284.20M | 403.90M | 371.70M | Investing Cash Flow |
| 28.50M | 136.80M | 2.04B | -207.60M | -399.90M | -222.60M | Financing Cash Flow |
| -674.30M | -746.30M | -1.67B | -218.90M | -535.50M | 450.30M |
Valvoline Technical Analysis
Negative
33.61
Price Trends
34.50
Negative
35.65
Negative
38.09
Negative
Market Momentum
0.06
Negative
44.96
Neutral
69.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VVV, the sentiment is Negative. The current price of 33.61 is below the 20-day moving average (MA) of 34.44, below the 50-day MA of 34.50, and below the 200-day MA of 38.09, indicating a bearish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 44.96 is Neutral, neither overbought nor oversold. The STOCH value of 69.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VVV.
Valvoline Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.39B | 8.60 | 14.87% | 3.46% | -4.58% | -23.88% | |
72 Outperform | $6.85B | 35.13 | -1.49% | 5.53% | -11.17% | -109.60% | |
71 Outperform | $4.44B | 17.22 | 174.55% | ― | 9.56% | 64.10% | |
64 Neutral | $2.49B | 5.14 | -69.81% | 5.87% | -2.76% | -628.74% | |
57 Neutral | $7.14B | 3.33 | -3.45% | 5.75% | 0.66% | -50.76% | |
55 Neutral | $2.46B | ― | -18.01% | 4.94% | -16.30% | -160.78% | |
46 Neutral | $2.41B | 268.82 | -27.14% | 8.61% | -16.21% | -130.18% |
* Energy Sector Average
Performance Comparison
VVV
Valvoline
33.61
-7.44
-18.12%
CVI
CVR Energy
22.26
-6.90
-23.66%
DINO
HF Sinclair Corporation
34.99
-18.65
-34.77%
UGP
Ultrapar Participacoes SA
2.97
-1.62
-35.29%
PBF
PBF Energy
20.13
-26.92
-57.22%
CSAN
Cosan
5.44
-5.08
-48.29%
Valvoline Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q2-2025)
| % Change Since: -2.78%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
Valvoline Inc. reported strong sales growth and store expansion, along with successful strategic initiatives and positive customer feedback. However, challenges remain with declining gross margins and increased SG&A costs due to refranchising. Despite these challenges, the impact of tariffs is expected to be minimal. Overall, the positive aspects outweigh the negative, suggesting a resilient business performance.Q2-2025 Updates
Positive Updates
Strong System-Wide Sales and Store Growth
System-wide sales increased by 11% to $826 million, with same-store sales growth of 5.8%. The total net sales rose by 11% to $403 million after adjustments. The company expanded its store count by 8% to 2,078 locations.
Operational Efficiency and Strategic Initiatives
Valvoline Inc. successfully transitioned its customer and marketing database to the cloud, enhancing marketing efficiency. The company also launched university athletic partnerships in Ohio and Tennessee to boost customer acquisition.
Refranchising and Strategic Partnerships
New franchise partners increased their store opening pace, with some ramping from one store every couple of years to four new stores this year. This has been a part of Valvoline Inc.'s strategy to accelerate network growth.
Positive Customer Feedback and Brand Strength
Valvoline Inc. received a customer satisfaction rating of 4.7 out of 5 stars based on over a million surveys, highlighting strong customer service and brand loyalty.
Minimal Impact from Tariffs
Valvoline Inc. expects the impact of tariffs to be minimal, estimating an operating cost impact of less than $4 million system-wide for fiscal year 2025.
Negative Updates
Gross Margin Decline
Gross margin rate decreased by 30 basis points year over year to 37.3%, primarily due to deleverage on product cost and store expenses.
SG&A Cost Pressures
SG&A as a percentage of sales increased by 150 basis points to 19.3%, driven by the impact of refranchising and technology investments.
EBITDA Margin Decline
Adjusted EBITDA margin decreased by 110 basis points over the prior year, with a noted 6% increase on a recast basis when considering refranchising.
Company Guidance
During Valvoline Inc.'s second-quarter fiscal 2025 earnings call, the company reported a robust performance with a system-wide sales increase of 11% to $826 million and same-store sales growth of 5.8%. Total net sales rose by 11% to $403 million, adjusted for refranchising impacts, and the adjusted EBITDA grew by 6%. Valvoline's system-wide store count reached 2,078, marking an 8% increase over the previous year. The company addressed tariff impacts, estimating a minimal fiscal year 2025 operating cost impact of less than $4 million system-wide, with an expected 1-2% increase in cost of sales. Strategic priorities included marketing sophistication and talent management, contributing to a strong customer rating of 4.7 out of 5 stars. Valvoline reaffirmed its guidance, emphasizing confidence in navigating macroeconomic uncertainties and maintaining the growth trajectory.Valvoline Corporate Events
Executive/Board ChangesM&A TransactionsFinancial Disclosures
Valvoline Appoints New CFO Amidst Financial Growth
Positive
May 8, 2025
On May 8, 2025, Valvoline announced the appointment of J. Kevin Willis as the new Chief Financial Officer, effective May 19, 2025, succeeding Mary E. Meixelsperger, who is retiring. The company also reported its second-quarter financial results, with a 4% increase in sales to $403 million and system-wide store sales growth of 11%. Despite a decline in income from continuing operations and EPS, Valvoline remains optimistic about its growth prospects, including the acquisition of Breeze Autocare to accelerate growth and earnings potential.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.