Valvoline beats earnings estimates as store network expands
Adjusted EPS of $0.37 tops analyst expectations as quick-lube chain adds 200 locations
Valvoline Inc. shares rose in early trading Wednesday after the automotive maintenance provider reported first-quarter earnings that topped Wall Street expectations, driven by robust same-store sales growth and a significant expansion of its retail network.
The Lexington, Kentucky-based company reported adjusted earnings per share of $0.37, surpassing analyst estimates of $0.33. Revenue increased 11% year-over-year to $462 million, reflecting the contribution from the recently acquired Breeze Autocare chain.
System-wide same-store sales grew 5.8% in the quarter, a key metric that measures performance at locations open for at least a year. The company expanded its network by 200 stores, including 162 from the Breeze acquisition, which brought approximately 200 quick-lube oil change outlets primarily operating under the Oil Changers brand into Valvoline's portfolio when the deal closed in December.
"Our fundamentals give us confidence in our growth algorithm," the company's chief executive said, though management provided no updates to numerical guidance.
Adjusted EBITDA rose 14% to $117 million, demonstrating improved operational efficiency despite the integration of new stores. However, Valvoline reported a GAAP loss of $32 million, which the company attributed to costs associated with divestitures required by the Federal Trade Commission.
The FTC had mandated the divestiture of 45 stores as a condition for approving the Breeze acquisition, citing antitrust concerns in 25 local markets where Valvoline and Oil Changers directly competed. Those divested outlets were acquired by Main Street Auto, an entity newly entering those specific markets.
Analysts have maintained a generally positive outlook on the stock heading into earnings. Valvoline carries a consensus rating of "Buy" with an average 12-month price target of $38.87, according to MarketBeat data. TD Cowen raised its price target to $38 from $37 on January 26, citing improving investor sentiment and the potential for fiscal 2026 to be a "beat-and-raise cycle."
The earnings beat represents a rebound for Valvoline after the company missed expectations in its fiscal fourth quarter, when it reported EPS of $0.45 against analyst estimates of $0.47. The stronger first-quarter performance suggests the Breeze integration is progressing smoothly and that core operations continue to generate growth despite competitive pressures in the quick-service automotive maintenance sector.
Valvoline, which operates more than 1,700 company-owned and franchised service centers, has been transforming its business model from a primarily product-focused lubricants company to a service-centric retail chain. The Breeze acquisition marked a significant step in that strategy, doubling the company's presence in the western United States.
Shares of Valvoline are up about 2% year-to-date, but have declined roughly 19% from their 52-week high of $41.33 reached last April. The stock currently trades at roughly 19 times forward earnings, slightly below its five-year average as investors await further evidence that the expanded retail footprint can deliver sustained profitability growth.