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Valvoline Inc (VVV)
NYSE:VVV

Valvoline (VVV) AI Stock Analysis

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VV

Valvoline

(NYSE:VVV)

Rating:72Outperform
Price Target:
$38.00
▲(3.83%Upside)
Valvoline shows strong financial performance with robust revenue growth and strategic initiatives supporting expansion. Some financial risks remain due to high leverage and free cash flow constraints. The company is technically neutral, with fair valuation and positive sentiment from recent earnings and corporate events.
Positive Factors
Growth Potential
Valvoline has room for further expansion into attractive markets, with overall market growth suggesting long-term secular tailwinds.
Market Positioning
Valvoline is a best-in-class operator in a highly-fragmented market benefiting from non-discretionary, needs-based demand.
Negative Factors
Financial Performance
Margins came in softer and will remain pressured, with adjusted EBITDA margin missing expectations and showing a year-over-year decline.
Stock Performance
Shares could remain rangebound in the near term despite a maintained positive bias and Buy rating.

Valvoline (VVV) vs. SPDR S&P 500 ETF (SPY)

Valvoline Business Overview & Revenue Model

Company DescriptionValvoline (VVV) is a leading global automotive and industrial lubricant supplier, specializing in the production, distribution, and marketing of premium branded automotive, commercial, and industrial lubricants, and automotive chemicals. Established in 1866, the company is recognized for its high-quality motor oils, additives, and maintenance products, serving both professional installers and do-it-yourself customers across various markets.
How the Company Makes MoneyValvoline makes money through multiple revenue streams, primarily from the sale of lubricants and related automotive products. The company operates a network of quick-lube service centers, branded as Valvoline Instant Oil Change, which provides oil change and preventive maintenance services. Revenue is generated through direct sales to consumers at these service locations as well as through retail and wholesale distribution channels where Valvoline products are sold to do-it-yourself consumers and professional installers. Additionally, Valvoline engages in strategic partnerships with automotive service providers and retailers to expand its market presence and drive sales growth.

Valvoline Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q2-2025)
|
% Change Since: 5.87%|
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 Financial Statement Overview

Summary
Valvoline's financials indicate strong revenue and profit growth with efficient operations and robust profitability margins. However, high leverage and limited equity buffer pose potential risks, and free cash flow constraints could impact financial flexibility.
Income Statement
85
Very Positive
Valvoline exhibits a strong income statement with consistent revenue growth reaching 1674 million in TTM (Trailing-Twelve-Months), a significant increase from 1619 million in the previous year. Gross profit margin stands at 38.3%, indicating efficient cost management. The net profit margin improved to 13.4% in TTM, showcasing enhanced profitability. EBIT and EBITDA margins are robust at 26.2% and 33.4%, respectively, reflecting strong operational efficiency.
Balance Sheet
60
Neutral
The balance sheet indicates moderate leverage with a debt-to-equity ratio of 5.51 as of TTM, which is high but common in the industry. Return on equity is solid at 90.1%, highlighting effective use of equity to generate profits. However, the equity ratio is relatively low at 10.1%, suggesting limited equity buffer against liabilities.
Cash Flow
75
Positive
Cash flows are stable with an operating cash flow to net income ratio of 1.18, indicating strong cash generation relative to profits. However, free cash flow growth is negative, decreasing from 40.7 million to 22.7 million in TTM, driven by increased capital expenditures. The free cash flow to net income ratio is low at 0.10, suggesting limited free cash availability for debt servicing and investments.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
1.67B1.62B1.44B1.24B1.04B727.00M
Gross Profit
641.20M618.80M544.50M476.40M432.30M301.00M
EBIT
438.70M367.20M247.20M220.30M240.10M160.20M
EBITDA
558.70M367.20M363.60M284.70M430.40M591.00M
Net Income Common Stockholders
224.00M211.50M1.42B424.30M420.30M316.60M
Balance SheetCash, Cash Equivalents and Short-Term Investments
61.90M68.30M756.60M23.40M122.60M760.00M
Total Assets
2.45B2.44B2.89B3.42B3.19B3.05B
Total Debt
1.37B1.37B1.83B1.92B1.86B2.19B
Net Debt
1.31B1.31B1.42B1.89B1.74B1.43B
Total Liabilities
2.20B2.25B2.69B3.11B3.06B3.13B
Stockholders Equity
248.70M185.60M203.20M306.60M134.50M-76.00M
Cash FlowFree Cash Flow
22.70M40.70M-221.30M152.20M300.80M277.70M
Operating Cash Flow
265.30M265.10M-40.80M284.20M403.90M371.70M
Investing Cash Flow
-83.50M136.80M2.04B-207.60M-399.90M-222.60M
Financing Cash Flow
-613.10M-746.30M-1.67B-218.90M-535.50M450.30M

Valvoline Technical Analysis

Technical Analysis Sentiment
Positive
Last Price36.60
Price Trends
50DMA
34.47
Positive
100DMA
35.59
Positive
200DMA
37.74
Negative
Market Momentum
MACD
0.59
Negative
RSI
61.49
Neutral
STOCH
87.82
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VVV, the sentiment is Positive. The current price of 36.6 is above the 20-day moving average (MA) of 35.10, above the 50-day MA of 34.47, and below the 200-day MA of 37.74, indicating a neutral trend. The MACD of 0.59 indicates Negative momentum. The RSI at 61.49 is Neutral, neither overbought nor oversold. The STOCH value of 87.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VVV.

Valvoline Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
VVVVV
72
Outperform
$4.65B17.75174.55%9.56%64.10%
71
Outperform
$7.03B35.13-1.49%5.45%-11.17%-109.60%
UGUGP
71
Outperform
$3.18B7.9614.87%3.70%-4.58%-23.80%
64
Neutral
$2.77B5.14-69.81%5.28%-2.76%-628.74%
58
Neutral
$7.35B3.36-4.49%5.60%0.82%-49.15%
CVCVI
53
Neutral
$2.49B268.82-27.14%8.40%-16.21%-130.18%
PBPBF
48
Neutral
$2.12B-18.01%5.66%-16.30%-160.78%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VVV
Valvoline
36.60
-4.00
-9.85%
CVI
CVR Energy
24.72
-2.25
-8.34%
DINO
HF Sinclair Corporation
37.31
-13.42
-26.45%
UGP
Ultrapar Participacoes SA
3.04
-1.05
-25.67%
PBF
PBF Energy
20.24
-24.00
-54.25%
CSAN
Cosan
5.95
-3.59
-37.63%

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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.