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Valvoline (VVV) Closes Buyout of Great Canadian Oil Change

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Valvoline Inc. (VVV - Free Report) recently announced the completion of the previously announced acquisition of Great Canadian Oil Change Franchising Ltd’s business assets. Notably, the deal marks the company’s first international quick-lube acquisition, enabling it to expand its quick-lube footprint outside the United States.

The buyout adds 73 Great Canadian Oil Change franchises to the company’s quick-lube network of more than 1,200 company- and franchise-owned locations in North America. With this acquisition, Great Canadian Oil Change has become the largest quick-lube brand for Valvoline in Canada.

Other Notable Acquisitions

Recently, Valvoline’s franchisee Big River Quality Auto Inc. completed the buyout of a quick lube location based in Evansville, IN. Also, the company acquired a quick lube location based in the greater Detroit area recently. Earlier, its franchisee, Superior Lube, too made a similar acquisition in the Salt Lake City Area. These two locations are now operating as Valvoline Instant Oil Change (VIOC) service centers.

Existing Business Scenario

Valvoline has been working diligently to strengthen its quick-lube model. Notably, it has taken several efforts ranging from organic expansion of stores to starting VOIC service stores and Express Care centers at acquired locations.

Exiting six months of fiscal 2018 (ended Mar 31, 2018), the company had 1,141 VIOC centers, comprising 445 owned by it and 696 at franchised locations. It plans to open 22 new stores in the second half of fiscal 2018, following the addition of 14 stores in the first half. Meanwhile, the company’s Express Care centers were at 323 locations.

However, in the last three months, this Zacks Rank #3 (Hold) stock has lost 1.7% compared with the industry’s decline of 1%. Also, the company has a dismal earnings surprise history with no beats in the trailing four quarters.

Key Picks

Some better-ranked stocks from the same space are KMG Chemicals, Inc. , Ingevity Corporation (NGVT - Free Report) and Versum Materials Inc. . While KMG Chemicals sports a Zacks Rank #1 (Strong Buy), Ingevity Corporation and Versum Materials carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals surpassed estimates in each of the trailing four quarters, with an average positive earnings surprise of 33.21%.

Ingevity Corporation outpaced estimates in each of the preceding four quarters, with an average earnings surprise of 20.15%.

Versum Materials exceeded estimates thrice in the preceding four quarters, with an average positive earnings surprise of 9.39%.

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