Should Valvoline (NYSE:VVV) Be Disappointed With Their 13% Profit?
One way to deal with stock volatility is to ensure you have a properly diverse portfolio. But if you're going to beat the market overall, you need to have individual stocks that outperform. Valvoline Inc. (NYSE:VVV) has done well over the last year, with the stock price up 13% beating the market return of 12% (not including dividends). Having said that, the longer term returns aren't so impressive, with stock gaining just 7.1% in three years.
See our latest analysis for Valvoline
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the last year Valvoline grew its earnings per share (EPS) by 31%. This EPS growth is significantly higher than the 13% increase in the share price. So it seems like the market has cooled on Valvoline, despite the growth. Interesting.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Valvoline has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Valvoline will grow revenue in the future.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Valvoline the TSR over the last year was 15%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Valvoline shareholders have gained 15% over twelve months (even including dividends) . This isn't far from the market return of 15%. That's not at all bad, but the cherry on top is that it's an improvement on prior returns (since shareholders only made 3.8% yearly over the last three years). We're certainly happy to see the uptick and we hope the underlying business goes on to justify the improved valuation. Before spending more time on Valvoline it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
