Howdy, Race Fans—It’s the Valvoline 500 Crash-Up Derby! (VVV)

Let the banks go under!  We’re flying high!

Get a load of this…

Most North American car owners are familiar with Valvoline Inc. (NYSE:VVV), provider of automotive parts and services across the United States and Canada.

She’s an old outfit—founded in 1866—but as of today, she’s tired.

The stock is wheezing, as the chart below will show.

Run the Numbers, Matty!

But before we get there, a quick look at the fundamentals…

• To start, P/E is an egregious 60.35.  And we ask: for what, exactly?  This is a chemical marketer, in essence.
• Forward P/E, according to analyst consensus is just 22.74.  So what’s the stock going to do in the next year?  That’s right—crash outright.
• Price to Book is an obscene 20.92 (at what point do you call the police?), and…
• The company is carrying a debt burden that we believe will ultimately bury it.  Debt/Equity is a walloping 6.50.
• EPS are DOWN for the last five years by 16.50%, and…
• Sales are DOWN for the last five years by 9.90%.
• Latest earnings numbers (announced February 7^th) were an embarrassment.  Q/Q EPS FELL 18.50%.

So what’s keeping the stock afloat?

Oh My G-d!

Possibly the following:

First, they just sold off all their international operations to Aramco.

Second, they promised to buy back stock over the next eighteen months.

But we don’t believe they’re going to pull it off as expected.

The company’s creaky in the joints and owes too much to stay solvent.

Have a look now at the weekly chart—

And the countdown to cash-in begins…

Der Eibishter yachlit!

Many happy retrns!

Matt McAbby

Follow @HughLOHaynew