Valvoline's Profitability Outlook Disappoints Amid Competitive Environment; Still, Shares Attractive
Despite on-track fiscal 2018 results, narrow-moat Valvoline's leadership highlighted competitive pressures in its core North American segment; the resulting reduction in our near-term outlook should lead us to trim our $23.50 per share valuation by a high-single-digit percentage. Still, with the higher-margin quick lube segment driving growth, our 10-year targets (mid-single-digit sales expansion, low-20s adjusted EBITDA margin, on average) should not change materially. We believe sentiment unde...Valvoline is a marketer and supplier of engine and automotive maintenance products and services. The company's segments are: Quick Lubes, which services the passenger car and light truck quick lube market via the company-owned, independent franchises and joint venture retail quick lube service center stores, as well as independent Express Care stores that service vehicles with the company's products; Core North America, which sells Valvoline? and other branded and private label engine and automotive maintenance products in the United States and Canada; and International, which sells Valvoline? and other branded engine and automotive products for the maintenance of consumer and commercial vehicles and equipment.
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