Valuation of Valvoline Inc.: Implications for Investors

Valvoline Inc.'s (NYSE: VVV) fair value estimate is US$28.49 using the 2-stage free cash flow to equity method. The company's current share price of US$38.40 implies a 35% overvaluation. Analysts predict a price target of US$43.73, which is 53% higher than the fair value estimate. The discounted cash flow (DCF) model estimates the present value of future cash flows to determine the intrinsic value of the company.

Valvoline Inc. (NYSE: VVV), a leading provider of automotive lubricants and services, is set to release its Q3 2025 earnings results on Wednesday, August 6th, before the market opens. Analysts are expecting the company to report earnings per share (EPS) of $0.45, a flat year-over-year (Y/Y) change, and revenue of $436.37 million, a 3.6% Y/Y increase [1]. Over the past two years, Valvoline has consistently beaten EPS and revenue estimates approximately 63% of the time [1].

The current fair value estimate for Valvoline Inc. is $28.49 using the 2-stage free cash flow to equity method. The company's current share price of $38.40 implies a 35% overvaluation compared to this estimate [2]. Analysts predict a price target of $43.73, which is 53% higher than the fair value estimate [2]. This discrepancy suggests that analysts are optimistic about the company's future prospects, potentially driven by its robust financial performance and strategic initiatives.

Valvoline Inc. reported positive earnings for the third quarter of 2025, with net income of $56.5 million and adjusted earnings of 47 cents per share, surpassing Wall Street expectations [2]. The company also posted revenue of $439 million, which exceeded analyst forecasts. Additionally, Valvoline updated its earnings guidance for the full year, narrowing its forecast after beating Q3 adjusted EPS expectations [2].

The company's Form 10-Q report for the third quarter of 2025 highlights its strong financial performance, with net revenues of $439.0 million, a 4.2% increase year-over-year (YOY), primarily driven by higher volume and a 4.9% increase in system-wide same-store sales (SSS) [3]. Gross profit increased by 6.0% YOY, and operating income rose to $94.7 million, reflecting a margin of 21.6% of net revenues. Net income increased to $56.5 million, supported by profit expansion from operations and lower net interest and other financing expenses [3]. Diluted earnings per share (EPS) increased by 19% YOY, reflecting improved earnings and operational performance [3].

Valvoline Inc. is focused on driving the full potential of its core business, aggressively growing its retail footprint, and targeting customer and service expansion. The company is also working towards completing the acquisition of Breeze Autocare, which is expected to enhance its market presence in California, Texas, and the Midwest [3].

References:
[1] https://seekingalpha.com/news/4478867-valvoline-q3-2025-earnings-preview
[2] https://www.ainvest.com/news/valvoline-shares-rise-2-01-hours-reporting-q3-earnings-beat-revenue-rise-2508/
[3] https://www.tradingview.com/news/tradingview:004eb4c8fc60b:0-valvoline-inc-sec-10-q-report/