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On Friday, RBC Capital Markets maintained a positive outlook on Valvoline Inc . (NYSE:VVV) shares, reiterating an Outperform rating and a $48.00 price target. The firm’s analyst provided insights following the company’s second-quarter fiscal year 2025 performance review, suggesting an expected earnings per share acceleration in fiscal year 2026. According to InvestingPro data, Valvoline boasts a perfect Piotroski Score of 9, indicating strong financial health, while maintaining a modest P/E ratio of 16.2 despite generating $1.67 billion in revenue over the last twelve months. Valvoline’s same-store sales (SSS) were reported to be better than anticipated, with the trend continuing into the third quarter, potentially leading to results above the mid-point of the reaffirmed full-year 2025 guidance.
The analyst noted that while ongoing refranchising efforts and technology investments might continue to impact profitability, the overall effect is anticipated to decrease as the year advances. Additionally, deflation in base oil prices is likely to help offset these impacts. InvestingPro analysis reveals the company maintains healthy profitability metrics, with a gross profit margin of 38.3% and a return on assets of 10.3%, suggesting effective operational management despite these transitional challenges. The firm adjusted its third-quarter SSS estimate to a 5.6% increase, slightly down from the previous 6.1%, taking into account the shift in Easter timing. Furthermore, the adjusted EBITDA estimate for the same quarter was slightly reduced to $124 million from the prior $126 million estimate.
Due to a second request from the Federal Trade Commission (FTC), RBC Capital Markets has also pushed back the expected closing date of the Breeze transaction from the third quarter of fiscal year 2025 to the first quarter of fiscal year 2026. The analyst revised the forecasts for fiscal years 2025 and 2026, now modeling SSS growth of 6.3% and 6.5%, respectively, down from the earlier projections of 6.3% and 7.0%. Revenue growth projections were also adjusted to 7% for fiscal year 2025 and a significant 25% for fiscal year 2026, reflecting a more optimistic view than the previous forecasts of 14% and 20%.
The price target for Valvoline remains set at $48, which is based on approximately 13 times the research firm’s revised calendar year 2026 adjusted EBITDA estimate of $597 million. Despite the minor adjustments in the quarterly estimates, the firm’s long-term outlook for Valvoline remains unchanged, signaling continued confidence in the company’s growth trajectory. InvestingPro analysis suggests the stock is currently undervalued, with 6 additional exclusive ProTips and a comprehensive Pro Research Report available to subscribers, offering deeper insights into Valvoline’s financial health and growth prospects.
In other recent news, Valvoline Inc. reported its second-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $0.34, which fell short of analysts’ expectations of $0.36. The company’s revenue, however, slightly exceeded forecasts, coming in at $403.2 million compared to the anticipated $403.11 million. Despite the EPS miss, Valvoline reaffirmed its full-year EBITDA guidance, indicating confidence in its future performance. The company also announced plans to add approximately 200 additional stores through the acquisition of Breeze Auto Care, although it is currently awaiting approval from the Federal Trade Commission to close the transaction. Valvoline’s system-wide sales increased by 11% to $826 million, and total net sales saw an 11% rise to $3 billion, adjusted for refranchising. Analysts from firms such as Seaport Research Partners and RBC Capital Markets engaged with Valvoline executives, discussing topics like same-store sales growth and the impact of refranchising on financial comparisons. As part of its strategic priorities, Valvoline is working on enhancing its marketing sophistication and talent management to drive demand and operational efficiency.
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