VVV
Valvoline Inc.
$40.27
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 31.9% below fair value
You pay
$40.27
Bear
$29.23
Fair
$59.09
Bull
$95.12
Bear
$29.23
-27.4%
11% stage 1 growth, 11% discount
Fair
$59.09
+46.7%
18% stage 1 growth, 11% discount
Bull
$95.12
+136.2%
24% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (18% base case)
Terminal Value % of EV
45%
Implied Market Multiple
27.4x
Market is pricing in (growth)
13.2%
vs 18.3% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $41.44 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $59.09 per share.
Warnings
This company spends 15% of revenue on big investments like data centers and infrastructure, mostly for growth. We adjusted the cash flow figure to only subtract the upkeep costs, giving a clearer picture of true profitability.
Wall Street's average price target is $41.44 (from 23 analysts). Our estimate is 57% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions