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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on VVV

Valvoline's recent performance was positively driven by its better-than-expected quarterly earnings of $0.37 per share, beating estimates by $0.03. The company's system-wide same-store sales growth of 5.8% and network expansion also contributed to its strong quarter. Institutional investors, such as Cooke & Bieler LP and Campbell & CO Investment Adviser LLC, have shown confidence in the company, with increased holdings and new positions, respectively. Additionally, Valvoline's acquisition of Breeze Autocare, adding 162 stores, is expected to boost revenue and EBITDA.

1.c. Company Highlights

2. Valvoline's Strong Q1 FY2026 Earnings: A Closer Look

Valvoline reported a robust first quarter fiscal 2026 performance, with net sales reaching $462 million, up 11% on a reported basis and 15% when adjusted for refranchising. The company's gross margin rate expanded 50 basis points year over year to 37.4%, driven by leverage in labor and product cost. Adjusted EBITDA margin increased 60 basis points to 25.4%, and EPS grew 16%, or 28% when adjusted for refranchising, to $0.37, beating estimates of $0.34.

Publication Date: Feb -08

📋 Highlights
  • Strong Same-Store Sales Growth:: System-wide same-store sales rose 13.8% on a two-year stack, driven by ticket growth, with net sales reaching $462 million (+11% reported, +15% adjusted for refranchising).
  • Margin Expansion:: Gross margin improved 50 bps to 37.4%, and adjusted EBITDA margin rose 60 bps to 25.4%, with EPS up 16% (28% adjusted for refranchising).
  • Breeze Acquisition Impact:: Added 162 stores, expected to contribute $160M in revenue and $31M EBITDA in FY2026, though causing ~100 bps EBITDA margin drag.
  • Deleveraging Progress:: Operating cash flow rose to $64.8M, free cash flow at $7.4M (+$20M YoY). Target leverage ratio reduced to 2.5x within 18-24 months.
  • Franchise & Tech Initiatives:: 38 net new stores opened, including 10 franchised. Launched CRM, SAP, and cloud-based tech upgrades to drive efficiency and customer engagement.

Operational Highlights

The company added 162 stores from the Breeze transaction and 38 net new stores, with 10 from franchise. The Breeze integration work is underway, and Valvoline is excited about the growth potential of these stores. As Lori Flees noted, "the company is working on integration planning, including systems integration and ensuring no market competition." The acquisition is expected to add $160 million to the top line and $31 million of EBITDA for the ten months it will be owned in fiscal 2026.

Margin Performance and Guidance

Gross margin performance was stronger than expected, driven by labor and product costs. The company expects continued progress on labor leverage and product costs. However, the Breeze acquisition is expected to have a negative impact on overall margin, around 100 basis points of EBITDA margin impact. Valvoline remains committed to its guidance for fiscal year 2026 and is confident in its ability to deliver on its commitments.

Valuation and Growth Prospects

With a P/E Ratio of 55.53 and an EV/EBITDA of 19.49, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 10.6%. The company's ROE is 28.57%, indicating strong profitability. The Net Debt / EBITDA ratio is 3.3 times, and the company aims to reduce it to 2.5 times within 18-24 months, allowing for potential resumption of share repurchases.

Strategic Initiatives

The company is considering a national ad fund, which may launch in fiscal 2027, driven by the growth of its network and the efficiency of national advertising. Valvoline has also implemented a new CRM system, SAP, and HRIS, and is moving to a cloud-based tech architecture, which provides efficiency and will drive value-added initiatives.

3. NewsRoom

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Valvoline Delivers 11% Revenue Growth Last Quarter as $11 Million Stake Becomes 6% Portfolio Bet

Feb -19

Source: fool.com

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Valvoline Instant Oil Change℠ Supports Children's Health in Arizona Through Concours in the Hills

Feb -13

Source: businesswire.com

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Valvoline: Still Has Decent Upsides From Here

Feb -13

Source: seekingalpha.com

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Here Are Thursday’s Top Wall Street Analyst Research Calls: BP Plc., Borg Warner, Generac, Kraft-Heinz, MercadoLibre, Pfizer, Shopify, Valvoline, and More

Feb -12

Source: 247wallst.com

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Valvoline (NYSE:VVV) Trading Up 8.6% Following Better-Than-Expected Earnings

Feb -05

Source: defenseworld.net

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Valvoline Inc. (VVV) Q1 2026 Earnings Call Transcript

Feb -04

Source: seekingalpha.com

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Valvoline (VVV) Q1 Earnings Beat Estimates

Feb -04

Source: zacks.com

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Valvoline Inc. Reports First Quarter Results

Feb -04

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.36%)

6. Segments

Oil Changes and Related Fees

Expected Growth: 12%

Valvoline's 12% growth in Oil Changes and Related Fees is driven by increasing vehicle miles driven, rising demand for preventive maintenance, and growing market share in the do-it-for-me (DIFM) segment. Additionally, the company's strategic expansion into new markets, improved customer retention, and premium product offerings also contribute to this growth.

Non-oil Changes and Related Fees

Expected Growth: 14%

Valvoline's 14% growth in Non-oil Changes and Related Fees is driven by increasing demand for premium maintenance services, expansion of quick-lube services, and strategic partnerships. Additionally, the company's focus on digital marketing and customer loyalty programs has contributed to the growth. Furthermore, the rise of electric and hybrid vehicles has led to increased demand for specialized maintenance services, benefiting Valvoline's business.

Franchise Fees and Other

Expected Growth: 11%

Valvoline Inc.'s 11% growth in Franchise Fees and Other is driven by increasing demand for quick-lube services, expansion of existing franchisees, and strategic acquisitions. Additionally, the company's focus on digital marketing and customer loyalty programs has contributed to higher royalties from franchisees. Furthermore, the growth of the company's installed base of quick-lube locations has led to higher fees from franchisees.

7. Detailed Products

Valvoline All-Car Motor Oils

A range of motor oils designed for passenger vehicles, providing superior engine protection and fuel efficiency.

Valvoline Synthetic Motor Oils

High-performance synthetic motor oils for extreme temperatures, heavy loads, and high-performance engines.

Valvoline Diesel Motor Oils

Heavy-duty diesel motor oils designed for diesel engines, providing superior soot control and fuel efficiency.

Valvoline Transmission Fluids

A range of transmission fluids designed for automatic, manual, and continuously variable transmissions.

Valvoline Brake Fluids

High-performance brake fluids designed for passenger vehicles, providing superior braking performance.

Valvoline Greases

A range of greases designed for wheel bearings, chassis, and other applications.

Valvoline Coolants

A range of coolants designed for passenger vehicles, providing superior engine cooling and corrosion protection.

Valvoline Fleet and Industrial Lubricants

A range of lubricants designed for commercial fleets, construction, and industrial applications.

Valvoline Instant Oil Change Services

Convenient oil change services for passenger vehicles, providing quick and reliable maintenance.

8. Valvoline Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Valvoline Inc. faces moderate threat from substitutes, as customers have limited alternatives for lubricants and automotive services. However, the company's strong brand reputation and wide distribution network help mitigate this threat.

Bargaining Power Of Customers

Valvoline Inc. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's diversified product offerings and strong brand reputation limit customers' ability to negotiate prices.

Bargaining Power Of Suppliers

Valvoline Inc. relies on a few large suppliers for raw materials, which gives them some bargaining power. However, the company's long-term contracts and diversified supply chain help mitigate this risk.

Threat Of New Entrants

The lubricant and automotive services industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and allows Valvoline Inc. to maintain its market position.

Intensity Of Rivalry

The lubricant and automotive services industry is highly competitive, with several established players competing for market share. Valvoline Inc. faces intense rivalry from companies like Castrol and Mobil, which can lead to pricing pressures and advertising wars.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 90.19%
Debt Cost 3.95%
Equity Weight 9.81%
Equity Cost 11.15%
WACC 4.65%
Leverage 919.00%

11. Quality Control: Valvoline Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.1/10

Value: 3.4

Growth: 5.3

Quality: 5.8

Yield: 0.0

Momentum: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.73$

Current Price

38.73$

Potential

-0.00%

Expected Cash-Flows