Is it time to consider buying Valvoline Inc. (NYSE: VVV)?

Although Valvoline Inc. (NYSE: VVV) may not have the largest market capitalization at the moment, it has received a lot of attention due to significant price movement on the NYSE over the past few months, rising to US$44.99 at one point, and dropping to a low of US$39.54. Certain stock price movements can give investors a better opportunity to enter the stock and potentially buy at a lower price. One question that needs to be answered is whether Valvoline’s current price of US$41.21 reflects the true value of the mid-cap company? Or is it currently undervalued, giving us an opportunity to buy? Let’s take a look at Valvoline’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Valvoline

What is Valvoline worth?

According to our valuation model, Valvoline appears to be reasonably priced, around 0.10% above our intrinsic value, which means if you buy Valvoline today, you’ll be paying a relatively reasonable price. And if you think the stock is actually worth $41.17, then there isn’t really any room for the stock price to rise beyond what it’s currently trading at. However, there could be a buying opportunity in the future. This is because Valvoline’s beta (a measure of stock price volatility) is high, meaning that price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s stock will likely fall more than the rest of the market, providing a great buying opportunity.

What type of growth will Valvoline generate?

Future outlook is an important aspect when considering buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors argue that it’s the intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, with relatively moderate earnings growth of 7.1% expected for next year, growth does not appear to be a key factor for a decision to buy Valvoline, at least in the short term.

What this means for you

Are you a shareholder? VVV’s future growth appears to have been factored into the current share price, with shares trading around their fair value. However, there are also other important factors that we haven’t considered today, such as the background of its management team. Have these factors changed since you last looked at the stock? Will you have enough conviction to buy if the price fluctuates below the true value?

Are you a potential investor? If you are monitoring VVV, now may not be the most optimal time to buy, given that it is trading around its fair value. However, the positive outlook means it’s worth taking a closer look at other factors, such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, if you want to deepen your analysis of the company, it is essential to be informed of the risks involved. In terms of investment risks, we have identified 2 warning signs with Valvoline, and understanding them should be part of your investment process.

If you are no longer interested in Valvoline, you can use our free platform to view our list of over 50 other stocks with high growth potential.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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