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Valvoline Inc VVV

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Morningstar’s Analysis

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Valvoline's Pursuit of Separation Does Not Alter Our Outlook; Shares Expensive

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Narrow-moat Valvoline announced it is pursing splitting its products and services businesses (about 60% and 40% of revenue, respectively) and also released some elements of its fiscal 2021 performance. While we do not plan to alter our $26.50 fair value estimate as a result of the move until Valvoline settles on a path forward (its earnings appear to meet our targets), we believe the split could focus both units on realizing their competitive advantages.

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Company Profile

Business Description

Valvoline produces, markets, and sells automotive maintenance products, particularly lubricants, to retail outlets and installer customers worldwide. The company caters to do-it-yourself customers by selling products to auto-parts stores and leading mass-merchandisers via direct sales and distributors. Valvoline targets the do-it-for-me segment by selling products to car dealers, general repair shops, and third-party quick-lube chains. Valvoline also operates and franchises quick-lube oil change centers, in addition to selling products and providing Valvoline-branded signage to smaller-scale independent operators. Product sales accounted for nearly 65% of fiscal 2020 sales, with the balance generated by its retail services (quick-lube) unit.

100 Valvoline Way
Lexington, KY, 40509
T +1 859 357-7777
Sector Energy
Industry Oil & Gas Refining & Marketing
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type Hard Assets
Employees 8,800