Amidst the pool of enticing ventures, Valvoline (NYSE:VVV), a specialist in retail automotive services with a focus on oil changes, might not immediately leap to mind. Yet, in terms of significance, VVV stock commands a higher level of consideration. While the world witnesses a shift towards electric vehicles, it’s important to acknowledge that the majority of U.S. drivers still rely on traditional combustion-powered cars.
Although it might not be a concept that promises instant wealth, VVV stock possesses enduring value over time. And this value has been consistent. Over the past five years, the equity value of VVV shares has increased by more than 66%. While not an extraordinary feat, Valvoline does offer investors a sense of security.
Moreover, an important trend in the consumer economy could bolster Valvoline’s importance and potentially stimulate demand for VVV stock. In a landscape where retail investors chase volatile trends that often lead to disappointment, this automotive services provider presents a stable foundation for building confidence.
Valvoline Stock Ascends in Afterhours Trading Following Strong Q3
To start off, those considering an investment in VVV stock now have an immediate incentive to explore this opportunity. Valvoline recently unveiled impressive results in its fiscal third-quarter 2023 earnings report, triggering a positive surge during the after-hours trading session on Wednesday.
In particular, Valvoline reported a profit of $61.6 million, translating to 38 cents per share. Adjusted for exceptional costs and discontinued operations, the earnings amounted to 43 cents per share. Significantly, this figure outperformed Wall Street’s expectations of 37 cents per share.
On the revenue front, Valvoline generated sales totaling $376.2 million, surpassing the consensus estimate of $363.9 million.
As anticipated, VVV stock attracted attention in the realm of unusual stock options volume. After the midweek session came to a close, the total volume reached 8,065 contracts, surpassing an open interest of 7,538. Furthermore, the volume difference between the Wednesday session and the trailing one-month average reached a remarkable 1,295.33%.
Notably, call options dominated the day’s transactions, with 6,565 contracts compared to 1,500 put contracts. This configuration resulted in a put/call volume ratio of 0.23. However, the put/call open interest ratio currently stands at a substantial 1.2X.
Nevertheless, analysts maintain an optimistic outlook on VVV stock, designating it as a consensus moderate buy. This assessment comprises three strong buy recommendations, one moderate buy, and three holds. Additionally, the expert median price target rests at $41.67, suggesting a nearly 19% upside potential. The high-end target reaches $45, indicating a growth potential of over 28%.
Consumer Struggles Translate into Heightened Valvoline Demand
S&P Global Mobility reported last year that the average age of vehicles on U.S. roads reached a record 12.2 years in 2021. As highlighted by Barchart content partner Zacks, this marked the fifth consecutive year of increase in this metric.
According to an AP report earlier this year, the average age now stands at 12.5 years, with sedans being even older at 13.6 years. In essence, consumers are grappling with soaring vehicle prices and are consequently holding onto their vehicles for longer durations.
At first glance, this scenario might not seem advantageous for VVV stock and the wider retail sector. If consumers are facing financial challenges, they might struggle to afford various services, some of which are essential. However, this circumstance also implies that average households are not yet prepared to make the transition to electric vehicles.
Furthermore, to prolong the lifespan of these aging vehicles, maintenance becomes paramount. Within this context, drivers might view Valvoline as a cost-effective option. Instead of being burdened with steep monthly payments (assuming a financing model), individuals can opt for periodic oil changes and other essential services.
Hence, while VVV stock might appear unremarkable, it holds surprising relevance. Consequently, it’s a prudent consideration for those in search of alternative investment opportunities.
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