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Valvoline (VVV) Adds 2 VIOC Centers to Quick Lube Portfolio

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Valvoline Inc. (VVV - Free Report) , yesterday, announced that it has acquired a quick lube location based in the greater Detroit area. A day earlier, its franchisee, Superior Lube made a similar acquisition in the Salt Lake City Area. These two locations are now operating as Valvoline Instant Oil Change (“VIOC”) service centers.

VIOC stores provide a variety of services, including tire rotation; preventive maintenance services related to the radiator, air conditioning and transmission; and replacement of safety parts like light bulbs and wiper blades. In addition, battery and fuel system services can be availed at many locations. Interestingly, VIOC service stores allow customers to stay inside the car and watch the services performed.

Earlier this month, the company’s franchisee, Henley Pacific SF, LLC acquired four quick lube locations based in the San Francisco Bay Area, which are operating as VIOC service centers. Also, Valvoline opened two new VIOC service centers — one in Florida and another in Massachusetts — through its Sunshine Lubes and Henley Enterprises franchisees, respectively. It also announced the opening of VIOC service center at a quick-lube location acquired in Arizona while opened Express Care centers in California and Arkansas.

Valvoline’s Quick-Lube Model

Over time, Valvoline has been working diligently to strengthen its quick-lube model. Efforts ranging from organic expansion of stores to starting VOIC service stores and Express Care centers at acquired locations have been undertaken.

Exiting six months of fiscal 2018 (ended Mar 31, 2018), the company had 1,141 VIOC centers, including 445 owned by it and 696 at franchised locations. During the first half of fiscal 2018, the company added 14 new stores while anticipates adding another 22 new stores in the second half. The company’s Express Care centers were at 323 locations.

Notably, Valvoline’s Quick Lubes segment performed well in the second quarter of fiscal 2018 (ended Mar 31, 2018). Total sales grew 23% year over year while same-store-sales growth was in excess of 9.6%. For fiscal 2018 (ending September 2018), the company anticipates 23-25 VIOC company stores and 25-35 VIOC franchised stores. VIOC same-store-sales growth is predicted to be 6.5-7.5%, marking an upward revision from the previous projection of 5-7%.

Zacks Rank & Key Picks

With a market capitalization of nearly $4.1 billion, Valvoline currently carries a Zacks Rank #3 (Hold). The company’s Zacks Consensus Estimate is pegged at $1.34 per share for fiscal 2018 and $1.54 per share for fiscal 2019 (ending September 2019), reflecting a decline of 0.7% and growth of 2% from the respective 60-day-ago tallies. Also, estimates reflect a year-over-year decline of 3.6% for fiscal 2018 while representing growth of 14.3% for fiscal 2019.

Valvoline Inc. Price and Consensus

Valvoline Inc. Price and Consensus | Valvoline Inc. Quote

In the past three months, Valvoline’s shares have lost 4.6% against 6% growth recorded by the industry.

Some better-ranked stocks worth considering in the industry are CSW Industrials, Inc. , KMG Chemicals, Inc. and Ingevity Corporation (NGVT - Free Report) . While both CSW Industrials and KMG Chemicals sport a Zacks Rank #1 (Strong Buy), Ingevity carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates for these three stocks improved for the current year. Also, average earnings surprise for the last four quarters has been a positive 9.80% for CSW Industrials, 33.21% for KMG Chemicals and 20.15% for Ingevity.

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