This Famous Brand Name Reports Strong Results

Last night, Valvoline (VVV) wrapped up what has been a very successful earnings season for our Value Authority companies.

The company reported fourth-quarter earnings per share (EPS) of $0.40 vs. $0.34, which was $0.07 above expectations. Strength in Quick Lubes service centers continued to lead the gains for the company, with sales up 22%, including a 10% increase in same store sales, as the company grew its store base and benefited from sales other than oil changes. Operating income for the segment was up 14%. Results for North American and International lubricants were flat on the top and bottom line, as lower volumes were offset by higher prices and cost controls.

The company altered its guidance for fiscal 2020 EPS to $1.37-$1.48 a share, versus previous estimates of $1.45 a share. However, with the company’s recent history of under promising and over delivering, investors believe management is being conservative, resulting in the stock going up 4% today. Quick Lube remains strong, and with some stability with a chance of improvement in lubricants, the stock remains very attractively valued at less than 16X fiscal 2020 EPS estimates. I am raising my buy under price in VVV to $22.50 and my target is now $26.