Valvoline Inc. (NYSE:VVV), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$44.99 at one point, and dropping to the lows of US$39.54. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Valvoline's current trading price of US$41.81 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the 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.

What's The Opportunity In Valvoline?

According to our valuation model, Valvoline seems to be fairly priced at around 1.59% above our intrinsic value, which means if you buy Valvoline today, you'd be paying a relatively reasonable price for it. And if you believe that the stock is really worth $41.16, there's only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Valvoline's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Valvoline?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Though in the case of Valvoline, it is expected to deliver a relatively unexciting earnings growth of 7.1%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for Valvoline, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in VVV's future outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you've been keeping an eye on VVV, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 2 warning signs for Valvoline and we think they deserve your attention.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com