Valvoline Closes Buyout Of New Quick-Lube Center In Indiana

Valvoline Inc. (NYSE:VVV) announced that its franchisee Big River Quality Auto Inc. has completed the acquisition of a quick lube location based in Evansville, IN. Currently, the quick lube location is operating as Valvoline Instant Oil Change (VIOC) service center.

Notably, all four locations of the VIOC quick-lube are being operated by Big River Quality Auto. VIOC stores offers a wide variety of services, including tire rotation; preventive maintenance services related to the radiator, air conditioning and transmission as well as replacement of safety parts, like light bulbs and wiper blades. Majority of the locations provide fuel system and battery services as well. VIOC service stores allow customers to stay inside the car and watch the services performed.

Valvoline also acquired a quick lube location based in the greater Detroit area recently. Earlier, the company’s franchisee, Superior Lube, too made a similar acquisition in the Salt Lake City Area. These two locations are now operating as VIOC service centers.

In fact, Valvoline has been working diligently to strengthen its quick-lube model. In this regard, it has taken several efforts ranging from organic expansion of stores to starting VOIC service stores and Express Care centers at acquired locations.

Exiting six months of fiscal 2018 (ended Mar 31, 2018), the company had 1,141 VIOC centers, comprising 445 owned by it and 696 at franchised locations. While the company added 14 new stores in the first half of fiscal 2018, it plans to add another 22 new stores in the second half. Meanwhile, the company’s Express Care centers were at 323 locations.

In the last six months, shares of Valvoline have lost 15%, underperforming the industry’s decline of 2.7%.

In second-quarter fiscal 2018 (ended Mar 31, 2018), this Zacks Rank #3 (Hold) company’s Quick Lubes segment performed impressively. Evidently, 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 projected to be 6.5-7.5%, mirroring an upward revision from the previous projection of 5-7%.

Key Picks

Some better-ranked stocks from the same space include KMG Chemicals, Inc. (NYSE:KMG) , Ingevity Corporation (NYSE:NGVT) and Versum Materials Inc. (NYSE:VSM) . While KMG Chemicals sports a Zacks Rank #1 (Strong Buy), Ingevity Corporation and Versum Materials carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 33.21%.

Ingevity Corporation outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 20.15%.

Versum Materials exceeded estimates thrice in the preceding four quarters, with an average positive earnings surprise of 9.39%.

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