Valvoline (VVV) AI Stock Analysis

• Market Cap: $4.32B
• Dividend Yield: N/A
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 16.3
• Beta (1Y): 0.72
• Revenue Growth: 11.85%
• EPS Growth: N/A
• Country: US
• Employees: 10,500
• Sector: Energy
• Sector Strength: 46
• Industry: Oil & Gas Refining & Marketing
• EPS (TTM): 2.08
• Shares Outstanding: 127,100,500
• 10 Day Avg. Volume: 1,367,415
• 30 Day Avg. Volume: 1,663,940
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.37
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 9.58
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $41.78
• Price Target Upside: 22.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Valvoline's strong revenue growth and profitability are key strengths, though offset by high leverage and modest free cash flow. Technical indicators show bearish sentiment, but the company's strategic acquisitions and strong earnings performance suggest potential for future growth. Valuation appears reasonable, providing a balanced outlook for the stock.

Positive Factors

Financial Performance

Valvoline Inc is expected to expand its EBITDA margin, improving by 150 basis points and reaching the high end of management's prior long-term targets.

Market Position

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.

Negative Factors

Acquisition Concerns

The timing of Valvoline's acquisition of Breeze Autocare is questioned due to market concerns over the company's long-term earnings outlook and other ongoing internal initiatives that could strain resources.

Competitive Pressure

Downside risks include intensifying competition for oil change customers, complicating the comp outlook.

Valvoline Business Overview & Revenue Model

Company Description

Valvoline Inc. manufactures, markets, and supplies, engine and automotive maintenance products and services. It operates through two segments, Retail Services and Global Products. The company offers lubricants for passenger car, light duty, and heavy duty; antifreeze/coolants for original equipment manufacturers; functional and maintenance chemicals, such as brake fluids and power steering fluids, as well as specialty coatings for automotive and industrial applications; and oil and air filters for light-duty vehicles. It also provides batteries, windshield wiper blades, light bulbs, serpentine belts, and drain plugs. In addition, the company operates Valvoline instant oil change service centers. As of September 30, 2021, it operated and franchised approximately 1,594 quick-lube locations under the Valvoline Instant Oil Change brand in the United States and the Great Canadian Oil Change brand in Canada. The company also serves car dealers, general repair shops, and third-party quick lube locations, as well as through distributors and licensees. It has operations in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company was founded in 1866 and is headquartered in Lexington, Kentucky.

How the Company Makes Money

Valvoline 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's revenue growth and profitability are strong, with healthy profit margins. However, the high leverage, indicated by a debt-to-equity ratio of 5.68, and modest free cash flow growth pose risks to 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.

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.

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.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.62B	1.44B	1.24B	1.04B	727.00M
	Gross Profit
618.80M	544.50M	476.40M	432.30M	301.00M
	EBIT
367.20M	247.20M	220.30M	240.10M	160.20M
	EBITDA
367.20M	363.60M	284.70M	430.40M	591.00M
	Net Income Common Stockholders
211.50M	1.42B	424.30M	420.30M	316.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
68.30M	756.60M	23.40M	122.60M	760.00M
	Total Assets
2.44B	2.89B	3.42B	3.19B	3.05B
	Total Debt
1.37B	1.83B	1.92B	1.86B	2.19B
	Net Debt
1.31B	1.42B	1.89B	1.74B	1.43B
	Total Liabilities
2.25B	2.69B	3.11B	3.06B	3.13B
	Stockholders Equity
185.60M	203.20M	306.60M	134.50M	-76.00M
Cash Flow		Free Cash Flow
40.70M	-221.30M	152.20M	300.80M	277.70M
	Operating Cash Flow
265.10M	-40.80M	284.20M	403.90M	371.70M
	Investing Cash Flow
136.80M	2.04B	-207.60M	-399.90M	-222.60M
	Financing Cash Flow
-746.30M	-1.67B	-218.90M	-535.50M	450.30M

Valvoline Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 33.99
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 33.99 is above the 20-day moving average (MA) of 33.76, below the 50-day MA of 34.87, and below the 200-day MA of 38.82, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 47.72 is Neutral, neither overbought nor oversold. The STOCH value of 47.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VVV.

Valvoline Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UGP	69 Neutral	$3.40B	7.90	16.54%	3.45%	-1.88%	-12.12%
VVV	67 Neutral	$4.32B	16.30	186.35%	―	11.85%	―
DINO	64 Neutral	$6.03B	35.13	-1.48%	6.25%	-11.17%	-109.60%
CSAN	61 Neutral	$2.63B	5.14	-54.48%	5.54%	3.12%	-822.66%
Sector *	56 Neutral	$7.00B	3.42	-4.37%	5.89%	-0.12%	-48.35%
PBF	51 Neutral	$2.03B	―	-18.01%	―	-16.30%	-160.78%
CVI	46 Neutral	$2.03B	268.82	-27.14%	9.90%	-16.21%	-130.18%

Valvoline Corporate Events

Valvoline Expands Market with Acquisition of Breeze Autocare

On February 17, 2025, Valvoline Inc. announced its agreement to acquire OC IntermediateCo, which owns Breeze Autocare, a business with nearly 200 quick lube oil change stores under the Oil Changers brand, for approximately $625 million. This acquisition is expected to significantly expand Valvoline’s market presence, bringing its total number of locations to over 2,200, and is projected to close in fiscal Q3 2025, pending customary closing conditions and regulatory approvals. The deal aims to accelerate Valvoline’s growth and enhance its cash flow profile, leveraging Breeze Autocare’s strong track record and geographic reach.

Valvoline Reports Strong Q1 2024 Financial Performance

Valvoline reported robust financial results for the first quarter ended December 31, 2024, with an 11% increase in sales and substantial growth in system-wide store sales. The company also added 35 stores during the quarter and completed a significant refranchising transaction, which contributed to a 177% increase in income from continuing operations. Valvoline’s strategy includes expanding its store network, aiming for over 3,500 locations, and leveraging its business model to sustain profit growth, thereby enhancing its market position.