VVV - Valvoline: Premium Oil Premium Valuations

2024-05-23 12:10:23 ET

Summary

• Valvoline has seen lower earnings power following the sale of its Global Products business, which has been expected.
• Shares of Valvoline have seen gains, but mostly due to increased valuation multiples rather than improved operating performance.
• While the near term growth profile is good, I fear the long-term viability of the business model in light of premium valuation multiples.

In the fall of 2022, I concluded that Valvoline Inc. ( VVV ) was simplifying its business. The company announced the sale of its Global Products business in an effort to simplify the business, although the deal tag felt a bit soft. With pro forma implications not yet fully known, amidst uncertain corporate cost allocation, one thing was clear and that was that earnings would take a beating....

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